Sunday, 26 May 2019

Whether accused in cheque dishonour case can be acquitted if complainant sells secured asset after filing complaint case ?

The other reason given by the trial Court while acquitting the appellant was that the appellant was guilty of suppression of material facts in the present case. According to the trial Court, the appellant could not have claimed that the cheque was issued for discharge of legal debt or liability, when the appellant sold the vehicle for which loan had been disbursed and it failed to take into account the said amount realized from sale of vehicle and further that it suppressed the said fact from the Court.

13. A perusal of the record shows that the cheque in question was issued on 24-1-2007 by the respondent towards the return of specific amount of ` 7,79,380/- towards the repayment of the entire outstanding loan amount. This fact was specifically pleaded in the complaint and it was reiterated in the oral evidence of the witness who appeared on behalf of the appellant. The complaint in the present case was filed on 3-4-2007 as the disputed cheque stood dishonoured and the appellant was unable to realize the outstanding amount from the respondent. Thereafter, a period of about 17 months elapsed after issuance of said cheque by the respondent and about 15 months from the filing of the complaint. At this stage, the appellant sold the vehicle on 3-4-2007 and realized an amount of ` 3,45,000/-. The aforesaid dates clearly show that there was no question of suppression of facts by the appellant when the complaint was filed because the vehicle was sold after about 15 months from the filing of the complaint. Therefore, the date on which the cheque was issued by the respondent for the outstanding loan amount, there was a clear specified legal debt for which the respondent was liable. In this situation, the trial Court was not justified in drawing adverse inference against the appellant for having suppressed material facts. The events that occurred after filing of the complaint, could not have been part of the complaint and in any case, the legal debt or liability in the present case was required to be proved at the point in time when the aforesaid cheque dated 24-1-2007 was issued by the respondent. This aspect was not appreciated in the correct perspective by the trial Court while holding against the appellant.
It was for the respondent to have rebutted the presumption on the touchstone of preponderance of probabilities. The respondent could not have emphasized on sale of the vehicle and the alleged procedural illegalities committed by the respondent while selling the vehicle at an allegedly lower price. The appellant had sufficiently pleaded and proved its case that the cheque in question was issued for specified amount by the respondent for repayment of the entire outstanding loan amount, against which the respondent had failed to adduce any evidence or to discredit the evidence led by the appellant in that regard. The subsequent event of selling of vehicle would not come to the aid of a defaulting party like the respondent to claim that when the disputed cheque was issued, there was no legal debt or liability against him. The reliance sought to be placed on the judgment of the Kerala High Court in the case of Sudha Beevi vs. State of Kerala, reported at MANU/KE/0104/2004 : 2004 Cri.L.J. 3418 on behalf of the respondent, is wholly misplaced because in the said case the vehicle was seized prior to presenting of cheques. In the present case, the cheque in question stood dishonoured and the vehicle in question was seized much later. If the contention raised on behalf of the respondent is accepted, it would lead to absurd consequences. A party like the appellant would not be able to pursue its remedy of complaint for dishonour of cheque, despite all ingredients of the offence under Section 138 of the N.I. Act being satisfied, the moment it touched the vehicle, for the purchase of which a party like the respondent had taken loan, then defaulted and then having issued cheque for the outstanding loan amount, which in turn stood dishonoured. Consequently, it would also result in a defaulter like the respondent issuing a cheque towards discharge of entire outstanding liability, knowing fully well that it would stand dishonoured and then defiantly contending that because the person who had advanced loan amount sought to seize the vehicle to dispose it of, the whole basis for instituting complaint for offence under Section 138 of the N.I. Act, was taken away, despite dishonour of the cheque much earlier in point of time. Such a situation cannot be countenanced. The respondent may be entitled to institute appropriate proceedings to challenge the seizure and sale of vehicle, but he cannot be permitted to claim acquittal in the present proceedings.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Cri Appeal No. 292 of 2017

Decided On: 16.08.2018

Dharampeth Mahila Urban Credit Co-Operative Society Ltd.
Vs.  Rambahadur and Ors.

Hon'ble Judges/Coram:
Manish Pitale, J.

Citation: 2019(2) MHLJ 621

1. By this appeal, the appellant (original complainant) has challenged judgment and order dated 8-9-2016 passed by the Court of Judicial Magistrate First Class, Nagpur (trial Court) in Summary Complaint Case No. 4357 of 2007, whereby the respondent stood acquitted for offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short, 'the N.I. Act').

2. The case of the appellant in brief was that, being a Society, it advanced loan to its members/shareholders. The respondent was a member and shareholder of the appellant-Society and he approached the appellant for grant of loan, in order to purchase vehicle in April, 2004. A loan of ` 6,90,000/- was advanced to the respondent and the said loan amount along with agreed interest was to be repaid in equal monthly installments.

3. According to the appellant, the respondent was irregular in repayment of installments, from the very beginning, due to which the appellant had repeatedly requested the respondent to make good the defaults committed by him. Eventually, the respondent agreed to repay the entire outstanding amount and he issued a cheque bearing No. 111843 dated 24-1-2007 in favour of the appellant for an amount of ` 7,79,380/-. According to the case of the appellant, the said cheque was issued for discharge of the aforesaid liability by the respondent. When the said cheque was presented for encashment, it was returned unpaid for the reason "account closed".

4. The appellant was constrained to issue statutory notice under Section 138 of the N.I. Act to the respondent and thereafter, the appellant filed complaint on 3-4-2007, before the trial Court alleging that the respondent was liable to be punished for having committed offence under Section 138 of the N.I. Act.

5. The appellant produced oral and documentary evidence before the trial Court in support of its case. The respondent did not adduce any evidence in support of his defence. He cross examined the witness of the appellant.

6. On the basis of the material on record, the trial Court found that the witness of the appellant admitted in cross examination that after filing of the complaint on 3-4-2007, the appellant sold the vehicle in question on 11-7-2008 and realized an amount of ` 3,45,000/-. The trial Court found that the appellant was guilty of having suppressed the said fact. The Court also found substance in the contention raised on behalf of the respondent that the cheque in question could have been a blank cheque given by the respondent at the time of disbursal of loan, which was misused by the appellant. On this basis, the trial Court held that the respondent had succeeded in rebutting the presumption that arose against him under Sections 118 and 139 of the N.I. Act and thereby acquitted him by the impugned judgment and order.

7. Shri Akhtar Nawab Nabi Ansari, learned Counsel appearing on behalf of the appellant, contended that the approach adopted by the trial Court in the present case while acquitting the respondent was not proper and that findings rendered against the appellant about alleged suppression of facts were wholly unsustainable. It was submitted that when the appellant specifically pleaded in its complaint regarding the disbursal of loan advanced to the respondent and the fact that the cheque in question had been issued by the respondent in discharge of a specific amount of liability, the presumption under Sections 118 of 139 of the N.I. Act clearly operated against the respondent. It was contended that subsequent selling of the vehicle after about 17 months of filing of complaint against the respondent, was wholly irrelevant for deciding the question regarding the discharge of legal debt by the respondent. It was submitted that a perusal of the loan application form in the present case did not show submission of any blank cheque by the respondent and that therefore, the trial Court was wholly unjustified in rendering a finding on the basis of conjectures and surmises as cheque might have been issued by way of security in the form of a blank signed cheque at the time when the loan was disbursed. It was submitted that when the respondent failed to adduce any evidence in support of his defence and the evidence and material placed on record by the appellant was not discredited in cross examination, the trial Court was not justified in acquitting the respondent.

8. Per contra, Shri Kishore K. Bhangde, learned Counsel appearing on behalf of the respondent submitted that the respondent was not required to adduce any evidence in support of his defence. He could very well rebut the presumption operating against him by discrediting the witness of the appellant in cross examination and also by demonstrating on the basis of material on record mat a probable defence had been raised whereby the presumption stood rebutted. It was submitted that in the present case, the trial Court was justified in taking into account the selling of vehicle by the appellant and in holding that the cheque was not issued by the respondent in discharge of legal debt or liability. It was contended that the disputed cheque was nothing but a blank signed cheque issued by the respondent at the time of disbursal of loan and that therefore, the impugned judgment and order passed by the trial Court was justified. It was also submitted on behalf of the respondent that even the authorization for filing of complaint in the present case was not supported by material on record and that on this ground also the complaint was not maintainable before the trial Court.

9. Heard learned Counsel for the parties and perused the record. In the present case, it is clear from the record that while the appellant (original complainant) placed on record oral and documentary evidence in support of its claim, the respondent (original accused) did not adduce any evidence in support of his defence. The specific case of the appellant was that the cheque in question had been issued by the respondent in order to repay the entire outstanding loan amount. The specific pleadings in the complaint filed by the appellant before the trial Court, read as follows:

"3) It was agreed that the accused shall refund the loan amount alongwith the agreed interest and other charges by agreed monthly installments. However, right from the beginning the accused was irregular in making the payment of installments. The complainant made several requests and reminded the accused for repayment of the loan installments and to regularize the loan account, but the accused failed to comply with the same.

4) It is submitted that in order to repay the entire outstanding loan amount the accused issued a cheque bearing No. 111843, dated 24-1-2007 for `. 7,79,380/- [Rupees seven lac Seventy nine thousand three hundred eighty only] drawn on Parmatma Ek Sewak Nagrik Sahakari Bank Limited, Gandhi Gate, Cotton Market Road, Nagpur in favour of complainant society towards the repayment of the outstanding loan amount. Accordingly, the complainant society presented the said cheque for its encashment through its Banker, The Akola Urban Cooperative Bank Limited, Sitabuldi Branch, Nagpur. However, to the shock and surprise of complainant society, the said cheque was returned unpaid due to the reason 'Account Closed'. It is submitted that intimation regarding return of the cheque was given by the Banker of the complainant society vide Memorandum/intimation letter dated 24-1-2007 having endorsement "Accounts Closed".

10. The signature on the cheque was not disputed by the respondent and it was also not disputed that the cheque was in the custody of the appellant. But, it was contented on behalf of the respondent that the said cheque was nothing but a blank cheque given by him along with other necessary documents when he had applied for loan to the appellant. The trial Court has accepted the said contention of the respondent on the basis that in the last line in loan application form (Exhibit-24) at Serial No. 5, it is specifically mentioned that for disbursement of loan the applicant has to file a bank cheque.

11. The question that arises for consideration is when the aforesaid specific pleadings have been made in the complaint by the appellant, which are also supported by the oral evidence of the witness who appeared for the appellant, whether the trial Court was justified in holding that the cheque in question was given by the respondent along with other documents while obtaining the loan. It is significant that the respondent failed to appear in the witness box and he did not examine any witness on his behalf. There is nothing to show that the cheque in question was a cheque that was given by way of security by the respondent while obtaining the loan. It was the specific case of the appellant that cheque No. 111843 dated 24-1-2007 was issued by the respondent for an amount of ` 7,79,380/- to repay the entire outstanding loan amount. If it was the case of the respondent that the said cheque bearing No. 111843 was in fact a cheque given by him when he applied for the loan in the year 2004, it was incumbent upon him to have examined the bank official or any other relevant witness to show that the said cheque number pertained to a cheque book issued in the year 2004 and that although it was submitted by way of security in the year 2004, when the loan was obtained, it was later misused by the appellant. This was because presumption under Sections 118 and 139 of the N.I. Act clearly operated against the respondent in the present case. There was no cross examination of the witness of the appellant in this regard and therefore, if it was the positive case of the respondent that a blank cheque issued earlier by way of security was misused by the appellant, it was necessary for the respondent to have placed on record some oral and documentary evidence to prove such an assertion. Even otherwise, a perusal of the disputed cheque (Exhibit-27) does not show that a blank signed cheque issued by the respondent was later misused and details of the amount were filled up in the year 2007 by the appellant. Therefore, the trial Court clearly erred in accepting the said contention raised on behalf of the respondent.

12. The other reason given by the trial Court while acquitting the appellant was that the appellant was guilty of suppression of material facts in the present case. According to the trial Court, the appellant could not have claimed that the cheque was issued for discharge of legal debt or liability, when the appellant sold the vehicle for which loan had been disbursed and it failed to take into account the said amount realized from sale of vehicle and further that it suppressed the said fact from the Court.

13. A perusal of the record shows that the cheque in question was issued on 24-1-2007 by the respondent towards the return of specific amount of ` 7,79,380/- towards the repayment of the entire outstanding loan amount. This fact was specifically pleaded in the complaint and it was reiterated in the oral evidence of the witness who appeared on behalf of the appellant. The complaint in the present case was filed on 3-4-2007 as the disputed cheque stood dishonoured and the appellant was unable to realize the outstanding amount from the respondent. Thereafter, a period of about 17 months elapsed after issuance of said cheque by the respondent and about 15 months from the filing of the complaint. At this stage, the appellant sold the vehicle on 3-4-2007 and realized an amount of ` 3,45,000/-. The aforesaid dates clearly show that there was no question of suppression of facts by the appellant when the complaint was filed because the vehicle was sold after about 15 months from the filing of the complaint. Therefore, the date on which the cheque was issued by the respondent for the outstanding loan amount, there was a clear specified legal debt for which the respondent was liable. In this situation, the trial Court was not justified in drawing adverse inference against the appellant for having suppressed material facts. The events that occurred after filing of the complaint, could not have been part of the complaint and in any case, the legal debt or liability in the present case was required to be proved at the point in time when the aforesaid cheque dated 24-1-2007 was issued by the respondent. This aspect was not appreciated in the correct perspective by the trial Court while holding against the appellant.

14. The trial Court also calculated the payments alleged to have been made by the respondent and upon adding the amount realized by selling of the vehicle, a finding was rendered that the respondent had repaid a specific amount to the appellant. While undertaking the said exercise, the trial Court took into account submission made by the Counsel on behalf of the respondent regarding the amount of loan disbursed. As noted above, the respondent did not adduce any oral or documentary evidence to counter the evidence led on behalf of the appellant. In these circumstances, the trial Court proceeded on the basis of statements made on behalf of the respondent to find the amount of down payment made by the respondent, adding value of shares and other aspects to calculate the amount that could have been due from the respondent. In the absence of any effort made by the respondent to adduce oral or documentary evidence to support his claim, in the backdrop of the presumption operating against him, the trial Court could not have indulged in making such calculations, in order to conclude that there was no legal debt or liability to be discharged by the respondent.

15. It was for the respondent to have rebutted the presumption on the touchstone of preponderance of probabilities. The respondent could not have emphasized on sale of the vehicle and the alleged procedural illegalities committed by the respondent while selling the vehicle at an allegedly lower price. The appellant had sufficiently pleaded and proved its case that the cheque in question was issued for specified amount by the respondent for repayment of the entire outstanding loan amount, against which the respondent had failed to adduce any evidence or to discredit the evidence led by the appellant in that regard. The subsequent event of selling of vehicle would not come to the aid of a defaulting party like the respondent to claim that when the disputed cheque was issued, there was no legal debt or liability against him. The reliance sought to be placed on the judgment of the Kerala High Court in the case of Sudha Beevi vs. State of Kerala, reported at MANU/KE/0104/2004 : 2004 Cri.L.J. 3418 on behalf of the respondent, is wholly misplaced because in the said case the vehicle was seized prior to presenting of cheques. In the present case, the cheque in question stood dishonoured and the vehicle in question was seized much later. If the contention raised on behalf of the respondent is accepted, it would lead to absurd consequences. A party like the appellant would not be able to pursue its remedy of complaint for dishonour of cheque, despite all ingredients of the offence under Section 138 of the N.I. Act being satisfied, the moment it touched the vehicle, for the purchase of which a party like the respondent had taken loan, then defaulted and then having issued cheque for the outstanding loan amount, which in turn stood dishonoured. Consequently, it would also result in a defaulter like the respondent issuing a cheque towards discharge of entire outstanding liability, knowing fully well that it would stand dishonoured and then defiantly contending that because the person who had advanced loan amount sought to seize the vehicle to dispose it of, the whole basis for instituting complaint for offence under Section 138 of the N.I. Act, was taken away, despite dishonour of the cheque much earlier in point of time. Such a situation cannot be countenanced. The respondent may be entitled to institute appropriate proceedings to challenge the seizure and sale of vehicle, but he cannot be permitted to claim acquittal in the present proceedings.

16. The contention raised on behalf of the respondent in the present case that if the respondent was defaulting or irregular in paying installments, it could not be believed that he would have issued a single cheque for repayment of the entire outstanding loan, is also misplaced. In this regard, reliance was placed on the judgment of the Hon'ble Supreme Court in the case of Krishna Janardhan Bhat vs. Dattatraya G. Hegde, reported at MANU/SC/0503/2008 : 2008 (4) Mh.L.J. (S.C.) 354 : 2008 (2) Mh.L.J. (Cri) (S.C.) 447 : (2008) 2 SCC (Cri) 166. In the said case, the Hon'ble Supreme Court found issuance of cheque as unbelievable because it was found on facts that there was no proof that the complainant had indeed advanced money to the accused or that there had been any transaction between the parties. In the present case, the facts are completely different, because the appellant placed on record oral and documentary evidence to show the fact that the loan was indeed advanced to the respondent, that he had defaulted in repayment of the same and further it was specifically pleaded that the disputed cheque bearing a specific number and date was issued by the respondent for a specific amount towards repayment of outstanding loan. In this situation, it could not be said that it was unbelievable that the respondent could have issued cheque in question for repayment of the entire outstanding loan.

17. The contention raised on behalf of the respondent that the person who filed the complaint and appeared as a witness before the trial Court was not duly authorized and that therefore, the complaint itself was not maintainable has not been supported by any material. The emphasis of the respondent was on judgments pertaining to Power of Attorney holder not having personal knowledge to maintain a complaint and to adduce evidence in respect of the grievance of the appellant. It was contended that therefore, the person who filed the complaint and appeared as witness for the appellant had no locus standi. The said stand taken on behalf of the respondent is not sustainable. In the present case, the complaint has not been filed through Power of Attorney holder of the appellant but, it has been filed on the basis of resolution passed by the appellant in favour of the authorized person, which was duly proved by documentary evidence placed on record. In the case of M/s. M.M.T.C. Ltd. and another vs. M/s. Medchl Chemicals and Pharma Pvt. Ltd., reported at MANU/SC/0728/2001 : AIR 2002 SC 182, the Hon'ble Supreme Court has discussed this aspect of the law and it has been held that when a complaint is filed on behalf of Company or Society or a juristic person through a duly authorized person about which evidence is placed on record, it is sufficient in the eyes of law because by filing such a complaint criminal law is set into motion by a person duly authorized. The complaint in the present case cannot be said to be not maintainable in view of the oral and documentary evidence placed on record on behalf of the appellant. Thus, the said contention raised on behalf of the respondent is also not sustainable.

18. In the present case, the appellant placed on record oral and documentary evidence to show that the cheque was indeed issued by the respondent and sufficient material was placed on record to show that it was issued for a specified amount regarding outstanding loan to be repaid by the respondent. The presumption under Sections 118 and 139 of the N.I. Act operated in full force against the respondent as the appellant had proved all the foundational facts beyond reasonable doubt. The respondent could have rebutted the presumption on the touchstone of preponderance of probabilities. But, the respondent failed to adduce any evidence in support of his claim. He could have discredited the evidence placed on record on behalf of the appellant by cross examination. But, he failed to do so. The respondent relied upon the events that occurred subsequent to dishonour of disputed cheque, to justify that there was no legal debt or liability for the discharge of which the cheque had been issued. The defence of the respondent was not even probable in the facts and circumstances of the present case.

19. Yet, the trial Court drew adverse inferences against the appellant and erroneously held that the appellant had failed to place on record cogent evidence to show that the disputed cheque was issued for discharge of legal debt or liability. On this basis, the trial Court further erred in holding that the respondent had rebutted the presumption that operated against him under Sections 118 and 139 of the N.I. Act. On the basis of such erroneous findings, the trial Court erroneously acquitted the respondent by the impugned judgment and order.

20. In the light of the above, it is found that the present appeal deserves to be allowed. Accordingly, the appeal is allowed. The impugned judgment and order passed by the trial Court is quashed and set aside. It is held that the appellant is guilty of having committed offence punishable under Section 138 of the N.I. Act. Consequently, the appellant is liable to be punished and accordingly, he is directed to pay compensation to the appellant for the amount of cheque i.e. ` 7,79,380/- under Section 357(3) of the Code of Criminal Procedure, 1973, within a period of two months from today, failing which he shall suffer simple imprisonment for a period of 6 months.

21. Appeal stands disposed of in above terms.


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