Plea that cheque was issued for security purpose rejected by Supreme Court and conviction order by trial court upheld
July 31, 2018
A Bench of Judges, Justice Rohington Nariman and Justice Indu Malhotra have allowed the Criminal Appeal filed by the Complainant in T.P. Murugan (dead) Thr. Lrs. V. Bojan, Criminal Appeal No. 950-951 of 2018. This appeal has been filed against the judgment and order of the High Court of Madras dated 27.09.2013 by which judgment, Criminal Revision Petition filed by the respondent-accused was allowed by setting aside the order of conviction and sentence recorded against the accused under Section 138 of the Negotiable Instruments Act, 1881.
The facts of the case are:
On 07.08.2002, the respondent issued a Promissory Note for Rs.51,00,000/- in
favour of K.Posa Nandhi - the appellant in the Second Appeal. The Promissory
Note records that it was being issued against a loan. The respondent also
issued two cheques on the same date, one for Rs.37,00,000/- in favour of
K.Posa Nandhi, and the other for Rs. 14,00,000/- in favour of T.P.Murugan,
towards discharge of their liability for the investments made in M/s.
Maanihada Tea Produce Company.
The cheques were presented for encashment on 03.02.2003 by the appellants, which were dishonoured due to "Stop Payment" instructions issued by the respondent. The appellants issued the statutory notices under S.138 of the N.I. Act calling upon the respondent to discharge their debt/liability and clear their dues. The respondent vide his reply dated 17.02.2003 refuted the claim of the appellants. The appellants filed two complaints under S. 138 of the N.I. Act before the Court of Judicial Magistrate II, Coimbatore. The respondent contended that the signed blank Promissory Note was issued by him in favour of N.R.R. Finances Investments Pvt. Ltd. under a hire-purchase agreement for purchasing a lorry on loan basis. The said Promissory Note was not issued in favour of the appellant complainants.
The Promissory Note was filled up by DW.2 Mahesh, an employee of N.R.R.
Investments, after the signatures of the respondent were obtained on the
same. With respect to the two cheques which were dishonoured, the respondent
contended that these were amongst 10 blank cheques signed and handed over to
the appellant-K.Posa Nandhi as security, when he borrowed Rs.5,00,000/- in
1995.
That even though this loan was re-paid in 1996 with interest, the cheques
were not returned. The respondent further contended that he had issued a
letter on 09.11.2002 asking the appellants to return the 10 blank cheques.
The Trial Court found that the respondent had admitted his signatures both
on the Pronote and also on the two cheques for Rs. 37,00,000/- and
Rs.14,00,000/- respectively. The respondent also admitted that the appellant
had invested capital in their concern viz. M/s. Maanihada Tea Factory.
The Court disbelieved the version of the respondent with respect to the 10 blank cheques issued to the appellant in 1995. The respondent failed to place any material on record to show that he had ever asked for return of the 10 blank cheques, allegedly given by him to the respondent, for seven years. That after going through the detailed evidence adduced by the parties, the Trial Court held that the Cheques and Pronote were issued for repayment/discharge of a lawful debt. The respondent was found guilty under S. 138 of the N.I. Act, and sentenced him to undergo R.I. for six months and Fine of Rs.5000/-, failing which, he shall undergo one month's R.I. Aggrieved by the said judgment, the respondent-accused filed Criminal Appeal Nos. 437-438 of 2006 before the District and Sessions Judge, Fast Track Court No. III, Coimbatore. The District and Sessions Judge held that the presumption under Sections 118 and 139 of the N.I. Act was not rebutted by the respondent. It was proved by the complainants that there were insufficient funds in the bank account of the respondent at the time of issuance of the cheques. The respondent had with mala fide intention issued "Stop Payment" instructions. The respondent failed to give any explanation as to how the Pronote came into possession of the appellant.
Furthermore, the Sessions Court discarded the evidence adduced by the
accused, of DW.2 Mahesh, as being an interested witness, who had falsely
stated that he was an employee of N.R.R. Finances. This was rebutted by two
witnesses viz. PW.2 and PW.4, who were Directors of N.R.R. Finances who
deposed that DW.2 was never employed by this Company. The District and
Sessions Court affirmed the conviction and sentence awarded by the Trial
Court.
Aggrieved by the judgment and order dated 26.11.2008 passed by the District
and Sessions Judge, Fast Track Court No. III, Coimbatore, the
respondent-accused filed two Criminal Revision Nos. 1657-1658 of 2008 before
the Madras High Court. That even though the appellants herein- complainants
had initially participated in the proceedings, the present appellant was
unrepresented during the final hearing. The hearing of the Criminal Revision
Petitions proceeded ex parte.
The High Court recorded that the respondent-accused had not denied either
the issuance of the cheques, or his signatures on the Pronote and cheques.
The denial was only with regard to the circumstances, the manner and the
period during which the cheques were issued. The High Court took the view
that the burden cast on the respondent-accused was only to raise a doubt in
the mind of the Court about the nature of the transaction. The Ld. Single
Judge accepted the contention of the respondent that since the cheques and
the Pronote were issued on the same date, it could only be treated as a
security, and was not towards any debt or liability. By raising a doubt with
respect to the circumstances in which the Pronote and cheques were issued,
the respondent had discharged the presumption under S. 139 of the N.I. Act.
The High Court held that the Trial Court and the Sessions Court erred in
applying the legal principles of standard of proof for the complainant to
prove their case.
The High Court, while exercising its revisional jurisdiction, reversed the
concurrent findings of the Courts below, and set aside the judgment of
conviction and sentence passed against the accused.
Aggrieved by the judgment and order dated 27.09.2013 passed in Criminal
Revision Nos. 1657-1658 of 2008, the appellant-complainants filed the
present Special Leave Petitions.
The court observed that:
In the present case, the respondent has failed to produce any credible
evidence to rebut the statutory presumption. This would be evident from the
following circumstances:-
(i) The respondent-accused issued a Pronote for the amount covered by the
cheques, which clearly states that it was being issued for a loan;
(ii) The defence of the respondent that he had allegedly issued 10 blank
cheques in 1995 for repayment of a loan, has been disbelieved both by the
Trial Court and
Sessions Court, on the ground that the respondent did not ask for return of
the cheques for a period of seven years from 1995. This defence was
obviously a cover-up, and lacked credibility, and hence was rightly
discarded.
(iii) The letter dated 09.11.2002 was addressed by the respondent after he
had issued two cheques on 07.08.2002 for Rs.37,00,000/- and Rs.14,00,000/-
knowing fully well that he did not have sufficient funds in his account. The
letter dated 09.11.2002 was an after-thought, and was written to evade
liability. This defence also lacked credibility, as the appellants had never
asked for return of the alleged cheques for seven years.
(iv) The defence of the respondent that the Pronote dated 07.08.2002 signed
by him, was allegedly filled by one Mahesh-DW.2,an employee of N.R.R.
Finances, was rejected as being false. DW.2 himself admitted in his
cross-examination, that he did not file any document to prove that he was
employed in N.R.R. Finances.
On the contrary, the appellants -
complainants produced PW.2 and PW.4, Directors of N.R.R. Finances Investment
Pvt. Ltd., and PW.3, a Member of N.R.R. Chit funds, who deposed that DW.2
was never employed in N.R.R. Finances.
The appellants have proved their case by overwhelming evidence to establish
that the two cheques were issued towards the discharge of an existing
liability and legally enforceable debt. The respondent having admitted that
the cheques and Pronote were signed by him, the presumption under S.139
would operate. The respondent failed to rebut the presumption by adducing
any cogent or credible evidence. Hence, his defence is rejected.
The Supreme Court said:
"In view of the aforesaid facts and circumstances, the impugned order dated 27.09.2013 passed in Criminal Revision Petition Nos. 1657 and 1658 of 2008 is hereby set aside, and the order of Conviction and Fine passed by the Trial Court is restored."
Read the Judgment of Supreme Court of India in T.P. Murugan (dead) Thr. Lrs. V. Bojan, Criminal Appeal No. 950-951 of 2018 dated 31.7.2018