07 Dec 2020
Case : Kiran Rameshlal Bhandari v. Narayan Purushottam Sarada & Anr. Criminal Appeal No. 369 of 2017
Court : Bombay High Court
Bench : Justice Smt. Vibha Kankanwadi
Decided on : 07 Dec 2020
Section 138 of the Negotiable Instruments Act, 1881
Section 357(1) of the Code of Criminal Procedure, 1973
Brief Facts and Procedural History
1. The appellant is a businessman who extends the amount of ₹15,00,000/- and ₹6,00,000/ to the respondent as a loan. In the discharge of the said legal enforceable debt or liability, two cheques were issued by the respondent. After those cheques were deposited by the appellant in his bank, they were dishonoured for the reason “refer to drawer”.
2. Thereafter two separate notices were issued by the appellant. The respondent neither replied nor refunded the amount and therefore, the appellant filed two separate complaints.
3. Judicial Magistrate First Class acquitted the respondent of committing an offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The appellant then challenged the acquittal before the High Court.
The Issue of the Case
Whether the respondent is guilty of committing an offence punishable under Section 138 of the Negotiable Instruments Act, 1881?
The Observations of the Court
1. The respondent received notices from the appellant; he remained silent and did not take any prompt action. The defence of the respondent regarding misplaced signed blank cheques was unbelievable for being self-contradictory and devoid of any explanations.
2. The appellant had discharged the initial burden that there was legally enforceable debt or liability towards the respondent, in view of the fact that the appellant had an advanced loan to him with the help of documentary evidence. The respondent admitted his signature on the disputed cheques; then presumption under Section 139 of the Negotiable Instruments Act, 18881 favours the appellant which had not been rebutted by the respondent. As per the guidelines laid down in Baslingappa v. Mudibasappa [Criminal Appeal No.636 of 2019 decided by Hon’ble Supreme Court on 9 April, 2019] the High Court, came to the conclusion that the appellant had proved that he had extended loan and in the discharge of the said legally enforceable debt or liability the disputed cheques were issued by the respondent.
3. Both the cheques issued by the respondent have been dishonoured. The statutory notices issued by the appellant have not been complied with, and therefore, the respondent was guilty of committing the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The view taken by the learned Magistrate and thereby acquitting the respondent was held to be erroneous and not based on sound legal principles.
4. Though the legal principle is that merely because two views are possible, the Appellate Court should not take a contrary view; but as aforesaid the learned Magistrate had not scanned the evidence properly with sound legal principles and therefore, interference was required. Reliance was placed on the law explained by the Honourable Supreme Court in Govindaraju @ Govinda v. State by Sriramapuram P. S. & Anr. [(2012) 4 SCC 722].
5. In Anwar Ali and another v. The State of Himachal Pradesh [Criminal Appeal No. 1121 of 2016] decided on 25.09.2020 it was reiterated that while dealing with a judgment of acquittal, the appellate court has to consider the entire evidence on record, so as to arrive at a finding as to whether the views of the trial court were perverse or otherwise unsustainable. The appellate court is entitled to consider whether in arriving at a finding of fact, the trial court had failed to take into consideration admissible evidence and/ or had taken into consideration the evidence brought on record contrary to law. Similarly, the wrong placing of the burden of proof may also be a subject matter of scrutiny by the appellate court.
6. Thus, it was concluded that in exceptional cases where there are compelling circumstances, and the judgment under appeal is found to be perverse, the appellate court can interfere with the order of acquittal. The appellate court should bear in mind the presumption of innocence of the respondent and further that the trial court’s acquittal bolsters the presumption of his innocence. Interference in a routine manner where the other view is possible should be avoided unless there are good reasons for interference.
7. In Dalmia Cement (Bharat) Ltd vs. Galaxy Traders & Agencies Ltd., (2001) 6 SCC 463, the Supreme Court has explained the scope of the offence under Section 138 of the Negotiable Instrument Act, 1881. The Act was enacted and Section 138 incorporated with a specified object of making a special provision by incorporating a strict liability so far as the cheque, a negotiable instrument, is concerned. To achieve the objectives of the Act, the legislature has, in its wisdom, thought it proper to make such provisions in the Act for conferring such privileges to the mercantile instruments contemplated under it and provide special penalties and procedure in case the obligations under the instruments are not discharged. Section 138 of the Negotiable Instruments Act, 1881 makes a civil transaction to be an offence by the fiction of law which is dealt with by a specific procedure.
8. In Kaushalya Devi Massand vs. Roopkishore Khore, (2011) 3 SCR 879; the Supreme Court while dealing with a matter regarding quantum of sentence for the offence under Section 138 of the Negotiable Instruments Act, 1881, observed that an offence under Section 138 is almost in the nature of a civil wrong which has been given criminal overtones and that imposition of a fine payable as compensation to the aggrieved was sufficient to meet the ends of justice.
9. In R Vijayan v. Baby and another, (2012) 1 SCC 260 Honourable Supreme Court held that while awarding compensation in matters under Section 138 of the Negotiable Instruments Act, 1881 interest can be awarded @ 9% per annum.
10. Awarding a jail sentence to the respondent may not be in the interest of justice. The appellant would also be interested in getting his amount back. Therefore, payment of compensation under Section 357 of the Code of Criminal Procedure Act, 1973 to the appellant would be in the interest of justice.
11. The rate of interest in banks has gone down nowadays, and therefore, the rate of interest cannot be equal to the rate granted in R Vijayan v. Baby and another, (2012) 1 SCC 260. The cheques were drawn for ₹15,00,000/- and ₹6,00,000/- respectively. The complaint was filed in 2013 after the statutory notice. The amount became due to the appellant after the date of the notice. Respondent utilized the said amount for all these years.
The Decision Held by the Court
The Honourable High Court allowed the appeals and held that:
1. The Judgement and order of the Judicial Magistrate First Class, acquitting the respondent/respondent were set aside.
2. Respondent/respondent was convicted for the offence punishable under Section 138 of Negotiable Instruments Act and was sentenced to pay a fine of ₹18,00,000/- and ₹8,00,000/- respectively for the two cases.
3. In case of failure on the part of the respondent to deposit the said amount within the aforesaid period, he would undergo simple imprisonment of three months, in each case.
4. After the amount of fine is deposited in the Trial Court, amount of ₹17,50,000/- and Rs.7,50,000/- respectively be given to the appellant under Section 357(1) of Code of Criminal Procedure Act, 1973 and the rest of the amount had to be credited to Government.