Wednesday, 24 April 2013

Burden of proof in case of dishonour of cheque


 The applicant has come up with a case that he had given six cheques to non applicant no.2 as and by way of security for hand loan, which the applicant had borrowed from non applicant no.2 It is also the case of the applicant that the said amount was repaid and the said six instruments were demanded back. The evidence on record does not make out a case in that behalf. If at all the applicant had repaid sum of Rs. 20,000/- there could have been some documentary evidence to show that the applicant had repaid Rs.20,000/-. There is no 12
document to show that the applicant had repaid Rs. 20,000/-. Similarly, there is nothing on record to show There is nothing on record to show that the applicant had demanded the said cheques in writing. In substance, the case of the applicant that loan amount was repaid and the cheques were demanded back cannot be accepted. It is also required to be mentioned that at one stage, it was contended by applicant that cheques were lost. Except taking the said stand no efforts were made to prove the said stand before the Court. The applicant has not stepped into witness box. If it was the case of the applicant cheques were lost, he should have entered the witness box, given details and other particulars to show as to when the cheques were lost. If it was to the knowledge of the applicant that the said cheques have been lost, he should have issued "stop payment" orders to the said society. Nothing has been done in that behalf. In substance, the stand taken by applicant before this Court in this behalf cannot be accepted.

Bombay High Court
Rafique Raheman Shaha vs Unknown on 26 August, 2009
Bench: R.Y. Ganoo



1. Non applicant no.2 filed complaint under Section 138 of the Negotiable Instruments Act (hereinafter referred to as the 'Said Act') against the applicant in the court of Judicial Magistrate First Class 2nd Court, Jalgaon Jamod (hereinafter referred to as learned 'trial Judge'). The learned trial Judge conducted trial against the applicant and by judgment and order dated 2
10.10.2005 convicted the applicant under Section 138 of the Negotiable Instruments Act and sentenced him to suffer simple imprisonment for one year and to pay a fine of Rs. 1,60,000/-. It was also ordered that in default of payment of fine, the applicant should undergo simple imprisonment for three months. It was also ordered that out of fine, which will be deposited, a sum of Rs.1,60,000/- be paid over to non applicant no.2- complainant. This order dated 10.10.2005 was challenged by applicant by filing Criminal Appeal No. 23/2005 in the Sessions Court at Khamgaon. The learned Additional Sessions Judge, Khamgaon by judgment and order dated 06.09.2007, dismissed the appeal. Against both these orders, this revision application has been filed.
2. Few facts necessary for the disposal of the present revision are as under.
According to non applicant no.2-he had paid Rs. 50,000/- on 06.08.2003, Rs. 60,000/- on 09.08.2003 and Rs. 50,000/- on 14.08.2003. According to non applicant no.2, the applicant had delivered to non applicant no. 2 six instruments in the nature of cheques drawn on Buldhana Urban Co-operative Credit Society, 3
Jalgaon Jamod (hereinafter referred to as the 'said Society'). Those six instruments were delivered towards repayment of loan which was advanced to the applicant. Those six instruments got dishonoured when tendered in the Bank for realization and, therefore, non-applicant no. 2 issued notice at Exh.-28 dated 16.03.2004 being statutory notice under Section 138 of the said Act. The applicant replied to the said notice by reply dated 31.03.2004 at Exh.-87 through his Advocate Mr. Karim. As the applicant did not comply with the statutory notice, non applicant no.2 filed complaint as mentioned aforesaid.

3. The applicant presented his defence on following terms. Non applicant no. 2 was running Chit Fund and the blank instruments have been misused by non applicant no.2. It was also contended that applicant was liable to pay only Rs. 20,000/- to non applicant no. 2 and six instruments were given by way of security to non applicant no.2. It was also sought to be contended that the said instruments pertain to Account Nos. 85 and 49 maintained by the said society and those accounts were of two partners of Shaha Agencies and signatures of both 4
persons were necessary. It was also contended that loan of Rs. 20,000/- was paid by applicant and six instruments were demanded back. However, non applicant no.2 did not return the same. It was also contended that said six instruments were lost.

4. In the course of trial, non applicant no.2 Vishvanath stepped into witness box as PW1 and examined witnesses namely Santosh Kela, Divisional Manager of said Society as PW2 and Advocate Karim as PW3 to prove notice at Exh.-87. The applicant did not step into the witness box. The applicant examined in all seven persons as his witnesses and those witnesses were examined to show that non applicant no. 2 was running chit fund. The learned trial Judge appreciated evidence and passed order of conviction as mentioned aforesaid. The appeal also came to be dismissed.

5. Before this Court, learned Advocate Mr. Badhe appearing on behalf of the applicant submitted that the said society cannot be considered as banking institution in accordance with provisions of Section 5 (b) of the Banking Regulation Act and it was also contended that 5
the society was a Co-operative credit society and that six instruments cannot be termed as cheques as understood under the Negotiable Instruments Act and that they could be treated as only withdrawal slips. He had drawn my attention to the words "Qdr laLFksP;k mi;ksxklkBh" appearing on the left hand side of the said six instruments and had submitted that six instruments could not be termed as cheques within the meaning of Negotiable Instruments Act and, therefore, case under Section 138 of the Negotiable Instruments Act could not have been filed and, therefore, Courts below have committed error. Learned Advocate Mr. Badhe to that extent had taken me through the definition of term "member" appearing in Section 2 (19) of the Maharashtra Co-operative Societies Act (hereinafter referred to as 'MCS Act'). He had also drawn my attention to the definition of term "Society" as appearing in the MCS Act in Section 2(27). He had also drawn my attention to the provisions of Section 138 of the said Act and explanation (1). According to learned Advocate Mr. Badhe a perusal of the relevant provisions, which he had pointed out would go to show that six instruments cannot be termed as cheques and, therefore, 6
action under Section 138 of the said Act could not have been entertained.

6. Learned Advocate Mr. Jain, appearing on behalf of non applicant no. 2 had refuted the said contentions. He had relied upon judgment in the case of Hinganghat Nagri Sahakari Path Sanstha Maryadit, Hinganghat ..vs.. Ashok Keshavrao Fukat; 2008 (3) Mh.L.J. 732 to contend that if a Co-operative Society is doing the business of banking as defined in clause (b) of Section 5 of the Banking Regulation Act, it would be a Co- operative Bank as per Section 2(10) of the Co-operative Societies Act. He had taken me though the provisions of Section 2 (10) of the MCS Act where the words 'Co- operative bank' has been defined and had submitted that the said society will have to be treated as "bank" for the purposes of impugned transaction. He had further submitted that six instruments were deposited by applicant and the dishonour memo issued by the said society does not show that six instruments have been dishonoured for want of funds. He had, therefore, submitted that the arguments advanced by learned Advocate Mr. Badhe should not be accepted. He had 7
further submitted that the arguments advanced before this Court show that six instruments are not cheques was not advanced before the Courts below and, therefore, they should not be entertained by this Court.
7. I have considered the rival submissions. I am inclined to reject the arguments advanced by learned Advocate Mr. Badhe. Reading of various provisions, which have been cited by Mr. Badhe, it will have to be observed that the said Society will be governed by the provisions of Section 5 (b) of the Banking Regulation Act and will have to be treated as an institution doing banking business and hence said society will be a co-operative bank as per Section 2 (10) of the M.C.S. Act. It is not the case of the applicant that the said Society is not doing the business of "accepting for the purposes of loan or investment of deposit of money from the public eligible on admission or otherwise and withdrawal by the cheque, draft or otherwise". It is not the case of the applicant that the said society had its operations only with the members. Apart from the aforesaid observations, the two dishonour memos, which are on record do not show that the six instruments, which were delivered by the applicant to non 8
applicant no. 2 could not have been lodged for realization through a clearing house. If stand of the applicant that six instruments could not be equated with the cheques and non applicant no. 2 could not have deposited those instruments in his bank for realization, the said society should have declined to accept and honour those instruments on the ground that they could not be treated as cheques. The very fact that two dishonour memos merely mention that the instruments are dishonoured clearly goes to show that six instruments will have to be treated as cheques. In my view, the way in which events have taken place, the words "Qdr laLFksP;k mi;ksxklkBh" have turned to be redundant and cannot be accepted to mean that the said instruments can be used by only members of the society. If that was the fact, the same would have been mentioned on the dishonour memo. In view of this, the argument of learned Advocate Mr. Badhe cannot be accepted. No fault can be found with non applicant no. 2 in depositing those instruments with his banker for realization. The complaint filed on account of dishonour of those instruments i.e. cheques will have to be treated as properly filed.
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8. It is also required to be mentioned that the Divisional Manger of the Society Santosh Kela was in the witness box. No suggestion was made to him to get on record that said society is not covered by Section 5 (b) of Banking Regulation Act and Section 2 (10) of Maharashtra Co-operative Societies Act. In view of the above discussion the argument of learned Advocate Mr. Badhe that those six instruments cannot be termed as cheques is rejected.

9. The applicant has taken stand that the said six instruments were in respect of account held by two persons and, therefore, signature of only one person namely applicant was insufficient and, therefore, the instruments should be treated as bad. It is true that the Bank Manager Santosh Kela has admitted that the said instrument pertains to Account nos. 85 and 49, which stand in the name of two persons. However, dishonour memo does not show that the said instruments do not bear signatures of necessary parties. Hence, the arguments advanced by Mr. Badhe that signature of both account holders were required, cannot be accepted. 10
10. It was also argued by learned Advocate Mr. Badhe that non applicant no. 2 was running chit fund. It must be mentioned that as many as seven persons have been examined by the applicant to make effort to show that non applicant no. 2 was running chit fund. Leaving apart the evidence of these seven witnesses, I am inclined to observe that the stand of the applicant that non applicant no. 2 was running chit fund being made before this Court is contrary to what was a case of the applicant at the stage of recording evidence an in particular cross-examination of the complainant non applicant no.2. Perusal of the cross-examination of non applicant no.2-conducted on behalf of the applicant would go to show that a suggestion was made to non applicant no.2 that the applicant is running chit fund and non applicant no. 2 was a member. This suggestion has been denied by non applicant no.2 If this was a stand of the applicant, at the stage of recording of evidence of non applicant no.2, it is really surprising as to how the applicant could take up stand that non applicant no.2 was running a chit fund. Be that as it may. Seven persons who have come to the Court to give evidence have not been able to give satisfactory and cogent evidence to 11
show that non applicant no.2 was running the chit fund. Shaikh Shabir (DW1), Sk. Mukhtyar (DW2), Abdul Salim (DW3), Mohd. Azar (DW4), Jagganath (DW5), Mohd Nadim (DW6), Jumma Umad (DW7) have, in their examination- in-chief, stated that non applicant no. 2 was running a chit fund. However, except the bare word of these persons there is no evidence on behalf of the applicant. There is no material to show that no applicant no.2 was running a chit fund. Mere assertion across the bar and mere oral testimony of some persons cannot be accepted. In substance, the attempt made by applicant to show that non applicant no.2 was running a chit fund fails.
11. The applicant has come up with a case that he had given six cheques to non applicant no.2 as and by way of security for hand loan, which the applicant had borrowed from non applicant no.2 It is also the case of the applicant that the said amount was repaid and the said six instruments were demanded back. The evidence on record does not make out a case in that behalf. If at all the applicant had repaid sum of Rs. 20,000/- there could have been some documentary evidence to show that the applicant had repaid Rs.20,000/-. There is no 12
document to show that the applicant had repaid Rs. 20,000/-. Similarly, there is nothing on record to show There is nothing on record to show that the applicant had demanded the said cheques in writing. In substance, the case of the applicant that loan amount was repaid and the cheques were demanded back cannot be accepted. It is also required to be mentioned that at one stage, it was contended by applicant that cheques were lost. Except taking the said stand no efforts were made to prove the said stand before the Court. The applicant has not stepped into witness box. If it was the case of the applicant cheques were lost, he should have entered the witness box, given details and other particulars to show as to when the cheques were lost. If it was to the knowledge of the applicant that the said cheques have been lost, he should have issued "stop payment" orders to the said society. Nothing has been done in that behalf. In substance, the stand taken by applicant before this Court in this behalf cannot be accepted.
12. It was argued that six cheques were given by way of security for the repayment of the same of Rs.20,000/-. It is not stated by applicant anywhere as to 13
when he had borrowed money from non applicant no.2, as to when he had given six cheques to non applicant no. 2 and other relevant details. To that extent, applicant has failed to discharge burden cast on him. If at all the applicant's case is accepted as it is that he was liable to pay a sum of Rs. 20,000/- to non applicant no.2 it is inconceivable that he would deliver to non applicant no.2 six instruments signed well in advance. If at all the applicant wanted to repay the money he could have easily delivered one instrument in favour of non applicant no.2 at a time when the applicant wanted to repay the monies. For the aforesaid reasons, I am inclined to observe that the applicant has failed to show that six instruments were given by way of security.
13. It was also argued by Mr. Badhe by placing reliance on Section 101 of the Indian Evidence Act that if it was the case of non applicant no.2 that he had advanced a sum of Rs. 1,60,000/- to the applicant, he should have produced the documentary evidence in support of that. This argument also cannot be accepted because the applicant has not been able to justify the burden qua issuance of six cheques and delivery of the 14
same in favour of non applicant no.2. If the applicant would have been in a position to discharge the burden qua six instruments then burden would have shifted on non applicant no.2 to show as to how he had advanced sum of Rs. 1,60,000/- to the applicant. The argument advanced by learned advocate Mr. Badhe is required to be rejected.

14. I have perused the impugned judgments, the learned trial Judge as well as learned Additional Sessions Judge have considered the entire evidence in proper perspective. The defence raised by the applicant were rightly negatived and the case put up by non applicant no.2 was rightly accepted and the learned trial Judge came to a proper conclusion that the applicant has committed an offence punishable under Section 138 of the Negotiable Instruments Act. The learned Additional Sessions Judge rightly confirmed the order passed by learned trial Judge. No interference is required in the impugned order in revisional jurisdiction of this Court.
15. So far as question of sentence is concerned, Mr. Badhe prays for leniency as against this Mr. Jain 15
submitted that a just and proper sentence has been passed by learned trial Judge. I have considered this aspect. I have noted that sentence imposed upon the applicant. Keeping in view the various facts, I am inclined to observe that no interference is required on the quantum of sentence imposed upon the applicant. For the reasons mentioned aforesaid, the revision is required to be dismissed. Hence, the order. The revision is dismissed.
JUDGE
kahale

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