P. Lakshmana Reddy, J.
1. This is an appeal filed against the order of acquittal, dated 11-12-2002 recorded by the IV Metropolitan Magistrate, Hyderabad in C.C. No. 789 of 2000.
2. The appellant is the complainant and the respondents 1 to 4 are the accused in the trial Court and hence they will hereinafter be referred as complainant and accused in this judgment respectively.
3. The relevant facts in brief are as follows:
The complainant filed a private complaint against the accused 1 to 4 before the IV Metropolitan Magistrate, Hyderabad alleging that the accused No. 1 is a company, Accused 2 to 4 are the Directors in the said company and that Al to A4 approached the complainant for deposit of Rs. 4.30 lakhs in the month of September, 1998 for the supply of BEL components and accordingly the complainant paid Rs. 4.30 lakhs by way of three cheques dated 17-9-1998, 17-9-1998 and 15-4-1999 and all those cheques have been encashed by the accused. The accused in discharge of the said liability issued three cheques bearing Nos. 037652 for Rs. 1.90 lakhs, 037653 for Rs. 1.10 lakhs and 057981 for Rs. 1.30 lakhs on 8-6-2000, 9-6-2000 and 9-6-2000 respectively drawn on Dena Bank, Bank Street Branch, Hyderabad and executed a bond dated 17-9-i998 and also two letters dated 17-9-1998 and one letter dated 15-4-1998 on the letter head of the accused company stating that the accused shall repay the same on demand. It is further alleged that the accused neither supplied the BEL components nor repaid the deposit money as promised by them. On approaching the accused several times for the repayment of deposit money, the accused instructed the complainant to deposit the above said three cheques for encashment and accordingly the complainant presented the three cheques issued by the accused to him for collection before the bank and the same were returned unpaid by the bank of the accused with reasons 'exceeds arrangement' with cheque return memos dated 9-6-2000 and 20-6-2000. Thereafter the complainant got issued legal notice to the accused on 14-6-2000 intimating the dishonour of the cheques and calling upon them to pay the amount due under the dishonoured cheques within 15 days from the date of receipt of legal notice. The accused received the said legal notice on 16-6-2000 and in spite of that the accused did not pay the cheque amounts, but got issued reply notice with false allegations and thus all the accused committed offence punishable under Section 138 of the Negotiable Instruments Act.
4. After recording the sworn statement of the complainant, the learned Magistrate took the case on file against the accused and issued summons to all the accused and after their appearance, furnished the copies of documents proposed to be relied upon by the complainant. The learned Magistrate examined them under Section 251 Cr. P.C. wherein the accused pleaded not guilty of the offence punishable under Section 138 of the Negotiable Instruments Act and claimed to be tried. The learned Magistrate conducted trial during which the complainant examined himself as PW-1 and exhibited Exs. P-1 to P-23.
5. After the prosecution evidence was closed, the learned Magistrate examined the accused under Section 313 Cr. P.C. wherein they described the incriminating evidence found in the evidence of PW 1 as false. They filed a written statement also pleading that the complainant is money lender and he lend the amount of Rs. 3 lakhs on 17-9-1998 and another 1.30 lakhs on 15-4-1999 and on the same dates of lending the complainant had taken cheques for the equal amounts as a security for the due amount. He has taken letters and also took mortgage of Ac. 6.00 of land belonging to the accused by taking pledge of title deeds for the said amount. On account of fire accident on 14-10-1999 property of Rs. 50 lakhs belonging to the accused was gutted and therefore, the accused could not repay the amount and after coming to know about the said accident the complainant put the dates with rubber stamps as 8-6-2000 and 9-6-2000 in the blank cheques taken as security and presented the same before the bank, knowingfully well that the accused company is in financial crisis on account of fire accident. Along with the said statement the accused filed copies of its accounts maintained in the regular course of business to show that interest was paid on the amount borrowed by the accused to the complainant. They also filed orders of the High Court appointing Arbitrator to adjudicate the dispute between the accused company and the United India Insurance Company Limited in respect of the claim made for the damage caused in the fire accident. They also filed remand case diary in F. R. R. No. 270 of 2001 on the file of Police Station, Koti, Hyderabad to show that the complainant had filed a report complaining cheating against the accused wherein the complainant categorically ad-mitted that he took the disputed cheques on the same day on which he lend the amount to the accused. They also filed orders of the High Court, which quashed the FIR in the said crime and certain medical prescriptions to show that A2 fell sick and he took treatment in Care Hospital. No oral evidence has been adduced on behalf of the accused.
6. Considering the evidence adduced on behalf of the prosecution and the statement of the accused and documents filed on behalf of the accused, the learned Magistrate found that the cheques in dispute were not issued on 8-6-2000 and 9-6-2000 and that the complainant took those two cheques i.e. one for Rs. 1,10,000/- and another for Rs. 1,90,000/-on 17-9-1998 itself without putting the date as a security for the amount lent on the same day and similarly the complainant took another cheque for Rs. 1,30,000/- from the accused without putting the date on 15-4-1999 itself on the date on which Rs. 1,30,000/- were lent by the complainant to the accused and that after the fire accident took place in the company of the accused the complainant made use of those cheques by putting dates as 8-6-2000 over the cheque issued for Rs. 1,90,000/- and as 9-6-2000 for the remaining two cheques issued for Rs. 1,10,000/-and 1,30,000/- and presented the same and got them dishonoured and filed the complaint. Thus, there was no debt by the date of issue of the three cheques issued by the accused and that those cheques were taken from the accused as security for the amounts deposited by the complainant to the accused and therefore, Section 138 of the Negotiable Instruments Act has no application. In support of his finding the learned Magistrate relied upon a decision of this Court in Shri Taher N. Khambati v. Vinayak Enterprises, Secunderabad and Ors. 1995 Crl. L.J. 560, wherein this Court held that in the event of creditor advancing certain sum to debtor and obtaining a signed blank cheque with a view to make use of it, for realization of amount, such cheque cannot be said to have been issued voluntarily for discharge of any debt and therefore, the provisions of Section 138 of the Negotiable Instruments Act does not attract for such cheques obtained by the creditor from the debtor without putting the date for the same amount. On the said finding the learned magistrate found all the accused not guilty of the offence punishable under Section 138 of the Negotiable Instruments Act and acquitted all of them.
7. Aggrieved by the said acquittal, the complainant preferred the present appeal contending that the order of the learned Magistrate is against law, weight of evidence and probabilities of the case. The learned Magistrate failed to appreciate the admissions made by the accused under Section 313 of the Code of Criminal Procedure examination that he received the deposits and that he is liable to pay the amounts due to the complainant and in pursuance of his liability only he issued the cheque. The Court below failed to take note several suggestions put to PW1 on behalf of the accused making admissions. The Court below failed to consider the judgments of the High Court and the Supreme Court that if the cheque is issued in pursuance of the liability and admission is made by the accused, it is sufficient to make out a case under Section 138 of the Negotiable Instruments Act. The Court below failed to consider that A. 1 is the company, A2 is the Managing Director, A3 and A.4 are the Directors of the company being his wife and son respectively and that all the accused admitted their joint and several liability and ail of them were participating in the day to day affairs of the company. The Court below failed to note that the complainant discharged his burden that the cheques were issued in pursuance of the deposits made by him and the said cheques were dishonoured due to insufficient funds and therefore, the ingredients covered under Section 138 of the Negotiable Instruments Act were fully satisfied. The observation of the learned Magistrate that the cheques Ex. P. 1 to P. 3 were issued in 1998 is totally perverse and it is not made out by the accused. The observation of the learned magistrate that A3 and A4 are not connected with the transaction is totally incorrect. A3 is the wife of A2 and A4 is the son of A2 and they are participating in day -to-day activities of the company. The learned magistrate is totally wrong in coming to the conclusion that the cheques were given as security. The Lower Court came to the conclusion that the amounts were given to A2 on behalf of Al company and the amounts were received by A2 and A2 issued cheques. The Lower Court came to conclusion that there was no existing liability at the time of issuing cheque, though the liability is not denied by the accused. The conclusion of the magistrate that there is no debt or liability is totally incorrect as on the date of issuance or presentation of cheque. The accused themselves admitted that there is a debt and they are liable to pay the amount to the complainant. The appellant prayed to set aside the order of acquittal and to punish the accused for the offence punishable under Section 138 of the Negotiable Instruments Act.
8. During the course of hearing of the appeal, the learned Counsel for the appellant reiterated the contentions raised in the grounds of appeal. The learned Counsel submitted that the accused admitted that they received Rs. 4,30,000/- from the complainant and the said debt has not been discharged and they are liable to discharge the said debt and therefore, the learned Magistrate erred in coming to the conclusion that the cheques were not issued for discharge of any legally enforceable debt. The learned Counsel further submitted that the accused did not chose to get into witness box and state on oath that the cheques were not issued towards any legally enforceable debt, and therefore, the learned magistrate erred in holding that the cheques were not issued towards any legally enforceable debt and that Section 138 of the Negotiable Instruments Act has no application.
9. The learned Counsel further submitted that the trial Court relied upon a single Judge decision of this Court in Shri Taher Khambati's case 1995 Cri LJ 560 (supra) which is no longer good law in view of the subsequent decisions of the Apex Court. The learned Counsel relied on the following decisions:
(1) K. N. Bheena v. Muniyappan and Anr. : 2001CriLJ4745 wherein the Apex Court held that the burden of proving that cheque had not been issued for any debt or liability is on the accused and that the denial/averments in reply by accused are not sufficient to shift burden of proof on to the complainant and that the accused has to prove in trial by leading cogent evidence that there was no debt or liability and that setting aside the con-viction on the basis of some formal evidence led by accused is not proper.
(2) In I.C.D.S. Ltd. v. Beemna Shabeer and Anr. AIR 2002 SC 3014 : 2002 Cri LJ 3935 wherein the Apex Court held that the cheque issued by the guarantor cannot be said to have not been issued for the purpose of discharging any debt or liability and that even in respect of such cheques issued by the guarantor, complaint under Section 138 of the Negotiable Instruments Act is applicable in the event of dishonour of such cheque.
(3) In Goa Plast (P) Ltd. v. Chico Ursula D'souza : 2004CriLJ664 wherein it has been held that where debt or liability was legally enforceable, the relationship between the parties concerned was not at all a factor germane to the proceedings under Section 138 of the Act and that the Courts have to see whether the drawer had sufficient funds in his account on the date of signing and presentation of the cheque, writing of the said letter and the date on which stop payment instructions were issued.
(4) In Bhaskaran Chandrasekharan v. Radhakrishnan 1998 Cri LJ 3228 wherein the Division Bench of the Kerala High Court held when a cheque is issued for valid consideration, with no dispute regarding the signature, amount and name, it cannot be said that putting a date on the cheque by the payee who is the holder of the cheque in due course would amount to material alteration rendering the instrument void. In fact, there is no material alteration. When a cheque is admittedly issued with blank date, and when the payee has no objection with regard to the name, amount and signature, it can be presumed that there is an implied consent for putting the date as and when required by the beneficiary, and get it encashed. In other words, when the date is put by the payee, or the drawer on the cheque the presumptions under Section 118 of the Act would arise. The burden is, therefore, entirely on the drawer of the cheque to establish that the payee had no authority to put the date and encash the cheque. It is further held therein that when the drawer issued cheque as security for loan transaction and there is no dispute regarding the signature, amount and name shown in the cheque, it can be presumed that the cheque was supported by consideration.
The learned Counsel further contended that A-l is the Company and A-2 is the Managing Director who signed the cheques and that A-3 and A-4 who are directors in A-1 Company did not adduce any evidence to the effect that they are not incharge of day to day activities of A-1 Company and therefore the trial Court erred in holding that A-3 and A-4 have no active participation in the business of A-1 Company and hence they are not liable for punishment under Section 138 of the Act.
10. On the other hand, the learned Counsel for the respondent-accused submitted that the accused received Rs. 3,00,000/- on 17-9-1998 and Rs. 1,30,000/- on 15-4-1999 as loan but not as deposit for the purchase of any goods and that the complainant is a money lender lending amount with high rate of interest and that on the date of borrowal the complainant had taken blank cheques for the equal amounts lent without filling the date column and besides that the appellant took two letters on the letter head from the accused and also bond on stamp paper and besides that the complainant took pledge of title deeds relating to Ac. 6.00 of land belonging to the accused and that on the date of issue of cheques by the accused, there was no debt or liability incurred and therefore the Court below rightly held that the cheques in dispute are not issued in discharge of any legally enforceable debt. He further submitted that the accused never disputed about his liability to pay the amount borrowed from the complainant and that as there was a fire accident in the factory of the accused, he promised to discharge the debt amount borrowed from the complainant after the insurance claim is settled and further when the accused requested the complainant to return the title deeds relating to Ac. 6.00 of land to enable him to sell the said land and discharge the debt due to the complainant, the complainant refused to return the title deeds relating to that land and on the other hand he presented the cheques knowing fully well that there was no amount of the accused in the bank and then launched prosecution in order to put pressure on the accused for immediate repayment and that Section 138 of the Act is not applicable to the cases of this nature. The learned Counsel further contended that there is absolutely no evidence to show that A-3 and A-4 are incharge of day-to-day business and they actively participated in the affairs of A-1 Company and therefore the trial Court rightly held that A-3 and A-4 who have not signed in the cheques cannot be prosecuted under Section 138 of the Negotiable Instruments Act.
11. The points that arise for determination in this appeal are:
(1) Whether Exs : P-1 and P 2 cheques were taken from the accused on 17-9-1998 without putting the date as security for the amount of Rs. 3,00,000/lent on that date and not on the dates 9-6-2000 and 10-6-2000 as contended by the accused?
(2) Whether the cheque Ex : P-3 for Rs. 1,30,000/- was taken on 15-4-1999 from the accused as security for the amount lent by the complainant to the accused on that day and it was not issued on the date 9-6-2000 contained therein, as contended by the accused?
(3) If so, whether the drawer cannot be prosecuted for the offence punishable under Section 138 of the Negotiable Instruments Act, in case of dishonour of such cheques?
(4) Whether A-3 and A-4 who are not signatories to the cheques issued are not liable to be prosecuted for the offence punishable under Section 138 of the Act?
(5) Whether the order of acquittal passed by the trial Court is not sustainable in law?
(6) To what relief?.
POINTS (1) & (2):
12. As seen from the complaint filed by the complainant, it is not stated as to when exactly the said cheques were issued by the accused. It is simply stated that the complainant deposited Rs. 3 lakhs on 17-9-1998 by way of two separate cheques dated 17-9-1998 one for Rs. 1,10,000/- and the other for Rs. 1,90,000/- and again on 15-4-1999 another sum of Rs. 1,30,000/- was deposited by the complainant by way of issue of cheque dated 15-4-1999 and that those cheques were encashed by the accused and in discharge of the above said liability the accused issued three cheques bearing Nos. 037652, dated 8-6-2000 for Rs. 1,90,000/-, No. 037653 dated 9-6-2000 for Rs. 1,10,000/- and also another cheque bearing No. 057981 dated 9-6-2000 for Rs. 1,30,000/- and further the accused executed bond dated 17-9-1998 and two letters dated 17-9-1998 and 15-4-1999 on the letter head of the accused company stating that the deposit will be repaid on demand. In the evidence the complaint who examined himself as PW-1 stated that he has given Rs. 3 lakhs to the accused as deposit on 17-9-1998 and another cheque for Rs. 1,30,000/on 15-4-1999 by way of cheques for supply of material and several times he requested the accused to supply the components, but failed to supply the components and then he requested the accused to return the amount deposited by him but the accused did not return the deposited amount and that after persuasion the accused issued three cheques one for Rs. 1,90,000/-, second for Rs. 1,10,000/- and third cheque for Rs. 1,30,000/- drawn on Dena Bank, Bank Street in his favour. He did not give the actual dates of issue of those cheques in the chief examination. During the course of cross-examination he denied the suggestion that he took three cheques on the dates on which he deposited the amounts with the accused without putting the dates on the cheques and that he put dates on the disputed cheques according to his choice and presented the same in the bank. The three cheques are bearing dates 8-6 2000, 9-6-2000 and 9-6-2000 and those dates were put by way of date seal in the date column of the cheques and above those date stamp the signature of the accused is found in all the three cheques. According to the accused the complainant took those cheques even before lending the amount without putting the date in the cheques and kept with him besides taking bond and also pledge of title deeds relating to Ac. 6.00 of land belonging to the accused. The version of PW-1 in his evidence is that he did not take three cheques in question on the dates on which he made deposits and that after the accused failed to supply the electrical components, he made demand for return of the deposits and then the accused issued cheques on 8-6-2000 and 9-6-2000. So it has to be seen whether the said version is true. PW-1 stated in his chief-examination itself that at the time of taking the loan amount the accused executed two letters on his letter heads dated 15-4-1999 on 17-9-1998 and also executed a bond paper on a non-judicial stamp of Rs. 20/- dated 17-9-1998. PW-1 exhibited those two letters as Exs. : P-14 and P-15 and the bond paper as Ex: P-16. As seen from Exs : P-14 and P-15 which is on the letter head of A-l company, it was written and signed by A-2 in the capacity of Managing Director. Ex: P-15 is dated 17-9-1998 and Ex: P-14 is dated 15-4-1999. Ex: P-15 reads as follows:
Received rupees three lakhs only by way of two cheques bearing No. 023086 of Times Bank, Hyderabad for Rupees One lakh ten thousand and another cheque bearing No. 061101 of A.P. Mahesh Co-operative Bank for Rupees One lakh ninety thousand from Sri Lakshmi Nivas Agarwal of Hyderabad as deposit for supply of BEL Components. This amount carries 18% interest per annum and is repayable on demand. As a refund cheque bearing No. 037652 of Dena Bank for Rs. 1,90,000/- and another cheque No. 037653 for Rs. 1,10,000/- issued today.
Similarly, Ex : P-14 letter dated 15-4-1999 reads as follows:
Received Rupees One lakh thirty thousand from Laxminivas Agrawal S/o B. N. Agrawal resident of Mahaboob gunj, Hyderabad by cheque No. 029288 of Tiemsk Bank for Rs. 1,30,000/- account payee in favour of Andhra Semiconductors Pvt. Ltd. on account of deposit to supply BEL components required by him. If no requirement comes, it does not buy any material, the same can be demanded within three days either by oral or by written and the amount will be paid only by pay order or by cheque of Andhra Semiconductors Pvt. Ltd. any delay in repayment, after the cheque is presented to the bank and if it gets it dishonoured, I hereby undertake as the sole responsible and I pay Rs. 50,000/- as penalty for non-payment on demand. I, D. Singaraiah, this in best of knowledge and in all good senses in capacity of Managing Director of Andhra Semiconductors Pvt. Ltd. as a refund cheque No. 057981 of Dena Bank for Rs. 1.3 lakhs issued.
Similarly, Ex: P-16 dated 17-9-1998 reads as follows:
I.D. Singaraiah, Managing Director of Andhra Semiconductors Pvt. Ltd. hereby pledge with Sri Laxminivas Agarwal, the landed documents of 6 acres of M/s. Singarayya Sugar Ltd. and R. C. book of Maruthi 800 Car No. APIR-2039.
13. From the reading of the above said letters Exs : P-14 and P-15 and bond Exs : P-16 it is crystal clear that the cheques Exs P-1 and P-2 were taken from the accused by the complainant for Rs. 1,10,000/- and Rs. 1,90,000/- on 17-9-1998 itself on the date on which Rs. 3 lakhs was paid by the complainant to the accused by way of two cheques one for Rs. 1,90,000/- and the other for Rs. 1,10,000/- and that those cheques were taken as security for refund of the deposit of the amount in the event of failure to supply BEL components, besides taking pledge of the documents relating to the land of Ac. 6.00 belonging to the accused. Simi larly, the cheque Ex: P-3 for Rs. 1,30,000/-was taken on 15-4-1999 on which date the complainant paid Rs. 1,30,000/- to the accused by way of cheque issued in favour of A-1 company. These three documents Exs : P-14 to P-16 exhibited by the complainant himself clearly belies his evidence that those cheques were not taken on the dates on which the amounts are deposited with the accused as security for repayment and that those cheques were issued by the accused on 8-6-2000, 9-6-2000 and 9-6-2000. Obviously the complainant wanted to take advantage of the dates contained in the cheques Exs : P-1 to P-3 to contend that those cheques were issued towards discharge of the debt or liability already incurred by the accused. It is true that Ex: P-1 cheque bears the date 9-6-2000, Ex: P-2 and Ex: P-3 bears the date 8-6-2000. Those dates are put by the stamp and not in the handwriting of the drawer but the signatures of the drawer are taken against the date column in all the three cheques. So merely because Ex: P-1 to P-3 do not bear the dates 17-9-1998 and 15-4-1999 and they bear different dates, it cannot be said that those cheques were not taken by the complainant on 17-9-1998 and 15-4-1999 on the dates on which the amounts were lent or deposited with the accused in view of the letters Exs:P-14 and P-15. In fact, according to PW-1 the said amount was deposited for supply of BEL components and that the accused promised to supply BEL components within 45 days but failed to supply and then he demanded return of the deposited amount. So it is clear that by the date on which the accused issued cheques Exs : P-1 to P-3 there was no existing liability or debt incurred/borrowed by the accused from the complainant and that those cheques were issued as security for the future contingent liability that may be incurred for refund of the amount in the event of failure to supply the BEL components. So I find considerable force in the contention of the learned Counsel for the respondents-accused that those cheques were taken as additional security by the complainant. As seen from Ex: P 16 the complainant has taken not only the blank cheques, but also took pledge of the title deeds relating to 6 acres of land belonging to the accused. Therefore, I have no hesitation to hold that the three cheques were taken from the accused by the complainant on 17-9-1998 and 15-4-1999 as security for prompt supply of BEL components or for prompt repayment in the event of failure to supply the components. Thus, these two points are found in favour of the respondents accused.
POINT No. 3:
14. The learned Counsel for the complainant contended that it is immaterial whether the cheques in dispute were taken on the date on which the amounts were deposited by the complainant with the accused or subsequently and that when once the issuance of the cheque, the amount mentioned therein and the signature contained therein are not in dispute, the Court shall presume that the said cheques were issued towards discharge of legally enforceable debt or other liability, unless the contrary is proved and that in the instant case, the accused did not choose to adduce any evidence and he did not choose to get into the box to state on oath that the said cheques were not issued towards discharge of any legally enforceable debt or other liability and hence the accused are liable for punishment under Section 138 of the Negotiable Instruments Act. In support of his contention he relied upon the above cited decisions. Whereas the respondents accused relied upon the decision of this Court in Shri Taher N. Khambati's Case 1995 Cri LJ 560 (supra). The learned Counsel for the accused submitted that the facts of the decision of this Court reported in Shri Taher N. Khambati's case (supra) are exactly similar to the facts of this case and therefore the said decision is very much applicable to the case on hand and that the law laid down therein still holds good and that the facts of the decisions relied on by the learned Counsel for the complainant are entirely different from the facts of this case and therefore those decisions cannot be applied to the facts of this case.
15. As seen from the facts concerned in the decision of this Court reported in Shri Taher N. Khambati's case 1995 Cri LJ 560 (supra), the case of the appellant complainant therein is that the respondents accused borrowed a sum of Rs. 1,00,000/- for the purpose of their business, promising to repay the same within a short time, and became liable in a sum of Rs. 1,18,337/- and in respect of the said transaction the respondents issued a cheque drawn on Karur Vysya Bank for the said amount with an understanding to present the said cheque on 15-10 1991 but the same was returned for want of sufficient funds and the first accused is the partnership firm and the second accused was one of the partners of the partnership firm. The case of the accused was that they approached the complainant for loan for which the complainant agreed to advance loan and gave loan of Rs. 96,500/- drawn on Balaji Mahadev Male in favour of the respondents-accused and then the respondents-accused executed a pronote for Rs. 1,00,000/- in favour of the appellant complainant agreeing to repay the same with interest at 20% per annum and that at that time the complainant got an account opened in the name of the respondents in Karur Vysya Bank and the cheque for Rs. 96,500/-was adjusted towards that account and it was stipulated that the respondents 1 and 2 should pay interest every month to the appellant complainant and further the appellant complainant also took a blank signed cheque from respondents 1 and 2 as security for payment of interest every month and it was understood that if the respondents fail to pay interest as stipulated, the appellant can present the cheque in the bank for the amount due by that date under the pronote and that the respondents paid the interest of Rs. 1,667/- every month and they stopped payment and by 15-10-1991 a sum of Rs. 18,337/- was due from the respondents towards interest and as the accused failed to pay the interest, the complainant filled up the blanks in the cheque as if it was issued for a sum of Rs. 1,18.337/- being the total amount due under the pronote after giving credit to the payment already made and presented the cheque for encashment before the bank. In other words the case of the accused is that the said cheque was taken as surety from them on the very date of lending the amount and not towards the discharge of the debt already borrowed and therefore Section 138 of the Act has no application. On the question of fact, it is found that the said cheque was taken without putting the date on the same day on which date the amount was lent to the accused as a security for prompt repayment. The trial Court found that it is not valid cheque as enunciated under Section 138 of the Act. In that case this Court confirmed the order of acquittal passed by the learned Magistrate. This Court in paragraph 10 of that judgment observed as follows:
Section 138 of the Act is introduced with a view to avoid the malignant trade practice of indiscriminately issuing cheques without sufficient funds. The amendment is introduced with a view to curb instances of issuing such cheques indiscriminately. So, having regard to the purpose with which this provision is introduced, it is doubtful ' whether a case of this nature can be construed as attracting the provisions of Section 138 of the Act. In the instant case, the appellant advanced some money to the respondents and obtained a pronote. It was stipulated that the respondents should pay interest every month. At the same time appellant-creditor took a blank signed cheques from the respondents with the understanding that the complainant could fill the other columns in the cheque and present it if the respondents committed default, in payment of interest. Then the appellant put the date as 15-1-1991, wrote his own name in the space intended for the payee and also mentioned amount as Rs. 1,18,337/- and presented the cheque. He would not have expected that the cheque would be honoured. He was presenting the cheque only with a view to get an endorsement, which would enable him to proceed under Section 138 of the Act. If this sort of practice is allowed, every Creditor would abuse the provisions of Section 138 of the Act by obtaining blank cheques and putting the debtors in the fear of presentation, insist on discharge of the debts at any time. I do not think that would have been the intention of the Legislature while incorporating Section 138 in the Negotiable Instruments Act. Though, the appellant did not state the circumstances under which he obtained the pronote and the cheque in his complaint yet it is clear from the evidence the circumstances under which the complainant obtained a signed blank cheque from the respondent. So, the appellant has obtained this blank signed cheque with a view to make use of it, as a threat to the respondents for realization of the amount. So, it cannot be construed that the respondent had issued the cheque voluntarily for discharge of any debt or legal liability as envisaged under Section 138, I, therefore, find that the facts and circumstances of the case are not attracted by the provisions of Section 138 of the Act and that the learned Magistrate was justified in acquitting the accused.
16. In the instant case also this Court found on question of fact that three cheques Exs. P. 1 to P-3 were taken only as security for prompt repayment and those cheques were not issued by the accused towards the discharge of any debt or other liability. In fact, by the date on which the cheques were taken there was no debt or liability borrowed/incurred by the accused. As already observed supra, only cheques were given by the complainant to the accused on the date on which the cheques in dispute were taken from the accused. Therefore, the proved facts of the cited case are similar to the proved facts in the instant case. There is no material to show that the decision in Shri Taher N. Khambati's case 1995 Cri LJ 560 (supra) has been overruled by any subsequent decision of this Court or by the Apex Court. I am in entire agreement with the view expressed by the learned Judge of this Court in the cited case. Section 138 of the Act is being misused by the money lenders. This is one of such instances. Admittedly, the complainant herein took pledge of title deeds relating to Ac 6.00 of land belonging to the accused. It is also not disputed that there was fire accident in the factory of the accused and the entire property of the accused was damaged and the accused made claim before thee Insurance Company. It is also not disputed that the accused herein gave reply stating about their financial condition and also promising to repay the same after the insurance claim is settled by the Insurance Company. It is the further case of the accused that though the accused demanded return of the title deeds of the land to enable them to sell the land and discharge the debt due to the complainant, the complainant refused to deliver those title deeds. It is also in the evidence that the complainant filed crimimil case of cheating against the accused and ultimately this Court quashed the said complaint. Thus, the complainant herein knowing fully well that the accused company is in financial distress on account of fire accident and knowing fully well that the accused company had no amount in the bank, filled up the blanks in the cheques as if those cheques were issued by the accused in discharge of the debt on 8-6-2000 and 9-6-2,000 and presented the same for encashment and got those cheques dishonoured and then launched the prosecution under Section 138 of the Negotiable Instruments Act. By no stretch of imagination it can be said that the Legislature introduced Section 138 of the Negotiable Instruments Act to assist such money lenders to harass the borrowers who were in financial distress. The legislature intends to punish only those who knowing fully well that they have no amount in the bank and yet issued any cheque in discharge of debt or liability already borrowed/incurred which amounts to cheating and not to punish those who could not discharge the debts borrowed or the liability incurred on account of financial stringency. If Section 138 of the Act can be made applicable to all the debts borrowed or the liability incurred by furnishing blank cheques as security, every borrower under a Negotiable Instrument who fails to repay the same can be prosecuted. Merely because the signatures in the cheques are admitted, it cannot be said in all cases that the drawer of the said cheque is liable for punishment under Section 138 of the Negotiable Instruments Act in the event of dishonour of those cheques. It is true that presumption is available in favour of the payee under Section 118 and 139 of the Negotiable Instruments Act. But, admittedly the said presumption is a rebuttal presumption and the borrower is at liberty to prove to the contra, the accused need not necessarily get into the box and state on oath and he is at liberty to point out the documents filed by the complainant to prove the date of issuance of cheque and that there was no debt or liability borrowed/incurred much less legally enforceable debt or liability on the dates of issue of cheques and that those cheques were issued under different circumstances. Here in the instant case, the documents filed by the complainant himself under Exs. P.14 and P-15 disclose that by the date of taking of the cheques Exs. P-1 to P-3 from the accused, there was no debt or liability incurred by the accused towards the. complainant. Therefore, the said letters themselves is sufficient to prove the contra to rebut the presumption available under Section 139 of the Negotiable Instruments Act. Further the accused during his examination under Section 313, Cr. P.C. filed documents along with his written statement to show that the cheques in question were taken as security for the amount lent by the complainant to the accused. Hence it cannot be said that the accused failed Lo prove contra to rebut the presumption available to the complainant under Section 139 of the Act. The decision of this Court in Shri Taher Khambati's case (supra) is very much applicable to the facts of this case.
17. The decisions of the Apex Court relied on by the complainant are not applicable to the facts of this case as the facts of the cited cases are different from the facts of this instant case, In fact, in C.D.S. Ltd.'s case 2002 Cri LJ 3935 (supra) relied on by the complainant there is a reference to the decision of this Court in Shri Taher N. Khambati's case 1995 Cri LJ 560 (supra) and the learned Judges of the Apex Court did not disagree with the view taken by this Court in Shri Taher N. Khambati's case (supra) and only observed that the said judgment of Andhra Pradesh High Court does not have any relationship in the contractual facts concerned with the Apex Court and hence the decision of this Court does not lend any assistance to the contention raised by the respondents-accused in the case before the Apex Court. In the case before the Apex Court the guarantor issued cheque and the said cheque was dishonoured. Guarantor took the plea that as he is only a guarantor. Section 138 of the Act has no application. But, the Apex Court held that even in respect of the cheque issued by the guarantor. Section 138 is applicable if the said cheque is dishonoured, though the guarantor did not in fact borrow any debt from the complainant. Here in the instant case the point in dispute is not of the nature considered by the Apex Court in the cited decision. Therefore, the said decision in I.C.D.S. Ltd.'s case 2002 Cri LJ 3935 (supra) does not come to the aid of the complainant in this case.
18. Coming to the cited decision in K. N. Beena's case 2001 Cri LJ 4745 (supra), there cannot be any dispute about the proposition of law laid down therein that the burden of proving that cheque had not been issued for any debt or liability is on the accused. In that case, the appellant filed complaint under Section 138 of the Act as the cheque dated 6th April, 1993 for a sum of Rs. 63,720/- issued by the accused was dishonoured with the remarks 'insufficient funds' and the appellant issued legal notice and in spite of notice, the cheque amount was not paid but a reply was given. The trial Court convicted the accused and directed the accused to pay fine of Rs. 65,000/- in default to suffer simple imprisonment for one year. The accused challenged the conviction by way of appeal before the Sessions Judge and the Sessions Judge also dismissed the appeal and confirmed the conviction. The accused then preferred revision before the High Court of Madras, which set aside the conviction and acquitted the accused on the ground that the appellant had not proved that the cheque dated 6th April, 1993 had been issued for any debt or liability. Then the complainant approached the Apex Court and the Apex Court held that the High Court erroneously proceeded on the basis that the burden of proving consideration for a dishonoured cheque is on the complainant and that the High Court lost sight of Sections 118 and 139 of the Act and that the burden of proving that a cheque had not been issued for debt or liability is on the accused. The Apex Court further observed that however the said presumption is rebuttal presumption. Even Section 139 of the Act also clearly shows that the presumption is a rebuttal presumption. Here in the instant case, the accused proved contra from the documents filed by the complainant himself that by the date of issuance of the cheque there was no existing debt or liability and that those cheques were taken as security for future liability. Therefore, this decision also does not come to the aid of the complainant in this case.
19. The other decision of the Apex Court in Goa Plast (P) Ltd.'s case 2004 Cri LJ 664 (supra) is not at all applicable to the facts of this case as the facts therein are entirely different from the facts of the instant case. In that case the accused issued 10 postdated cheques of Rs. 40,000/- each in favour of the appellant-Company for payment towards the liability of the amount misappropriated from the funds of the appellant. Thereafter he wrote a letter to the Company denying liability to pay the aforesaid sum and shifted the responsibility for the same on a third person. Thereafter the complainant deposited the first cheque for encashment and the said cheque as dishonoured on the ground that the accused issued instructions to stop payment. Then the complainant sent legal notice regarding the dishonour of cheque and demanded for payment of Rs. 40,000/- within 15 days and the accused failed to comply with the same, and then the complainant filed complaint under Section 138 of the Act. On such facts, it was held that the accused is liable for punishment under Section 138 of the Act. From the facts of that case, it is clear that the accused issued cheques admitting his misappropriation of funds of the complainant and also admitting his liability to pay the same. Thus, the said cheque were issued in discharge of that liability incurred by the accused. But in the instant case, no liability was incurred by the date of taking the cheques from the accused and the cheques were taken as security for the future contingent liability. Therefore, the cited decision of the Apex Court is also not at all applicable to the facts of the instant case.
20. The other decision relied on by the complainant is the decision of Division Bench of Kerala High Court 1998 Cri LJ 3228 (cited supra). The said decision does not relate to the case of criminal prosecution under Section 138 of the Act and it relates to a civil suit. The appellant therein is the defendant in the suit instituted by the respondent-plaintiff for realization of Rs. 30,000/- with interest. The case of the plaintiff was that the defendant borrowed an amount of Rs. 30,000/- and issued a cheque dated 11-6-1985 for the said amount and the said cheque was sent for collection and it was dishonoured and then a notice was issued to the. defendant and the defendant did not respond to the notice and hence the plaintiff had instituted the suit. The defendant in the written statement pleaded that he borrowed Rs. 30,000/- from the plaintiff, but, however, he admitted the issuance of the cheque but pleaded that it was issued without consideration for adjustment of certain transactions in connection with toddy shops. It was further contended by the defendants therein that the plaintiff inserted the date on the cheque without obtaining his consent and therefore it amounts to material alteration within the meaning of Section 87 of the Negotiable Instruments Act and it is void. On such facts, the Division Bench of Kerala High Court considered the Sections 87 and 118(b) of the Negotiable Instruments Act and Section 114 of the Indian Evidence Act and held as follows:
When a cheque is issued for valid consideration, with no dispute regarding signature, amount and name, it cannot be said that putting a date on the cheque by the payee who is the holder of the cheque in due courses would amount to material alteration rendering the instrument void. In fact, there is no material alteration. When a cheque is admittedly issued with blank date, and when the payee has no objection with regard to the name, amount and signature, it can be presumed that there is an implied consent for putting the date as and when required by the beneficiary, and get it encashed. In other words, when the date is put by the payee, or the drawer on the cheque the presumptions under Section 118 of the Act would arise. The burden is, therefore, entirely on the drawer of the cheque to establish that the payee had no authority to put the date and encash the cheque.
Therefore, it is clear that it is not a case relating to Section 138 of the Act and that those observations were made only in the civil suit. Such observations made in a civil suit cannot be made applicable to the criminal prosecution instituted under Section 138 of the Act. The learned Counsel for the complainant invited my attention to the observations of the Division Bench of Kerala High Court in paragraph 16 of that judgment wherein it is observed that the payee had got the implied authority to put the date when a blank cheque is given. But such presumption is available for the moneylenders only in a civil suit and not in a criminal prosecution. Here in the instant case the accused is not denying his liability to pay the amounts due to the complainant. He stated that now he is not in a position to discharge the said debt and as and when his insurance claim is cleared, he would repay that amount. It is further case of the accused that if the complainant delivers back the pledged title deeds relating to Ac 6.00 of land, the accused can sell that land and then discharge the debts due to the complainant. To such facts of this case the decision of Kerala High Court in a civil case, cannot be applied. Hence, I find no force in the contention of the learned Counsel for the complainant that even if the cheques Exs. P-1 to P-3 were issued by the accused even before the amounts were borrowed or the liability incurred, Section 138 of the Act is applicable in the event of dishonour of such cheques. Following to the decision of this Court in Shri Taher N. Khambat's case 1995 Cri LJ 560 (supra) I am of the considered view that the accused in the instant case cannot be prosecuted for the offence punishable under Section 138 of the Act for the dishonour of the cheques Exs, P- I to P-3. Thus, this point is also found in favour of the respondent-accused.
POINT NO. 4 :.
21. It is not disputed that A-3 and A-4 are the signatories to the cheque. Merely because they are the wife and son of A-2 who is the Managing Director of A-1 company and they are the directors of A-1 company, it cannot be said that they are liable for punishment under Section 138 of the Act. They may be liable to discharge the debt due by the company, but they cannot be made liable for the offence unless it is established that they are incharge of day-to-day affairs of A-1 Company. The trial Court rightly held that A-3 and A-4 are not liable for prosecution under Section 138 of the Act. Thus, this point is also found against the complainant.
POINT NO. 5:
22. In view of the findings on points 1 to 4. I am of the considered view that the trial Judge rightly placed reliance on the decision of this Court in Shri Taher N. Khambati's case 1995 Cri LJ 560 (supra) and rightly acquitted the accused in this case. I do not find any perversity in the reasons given by the trial Court for acquittal of the accused. Hence, there is no need for interference by this Court with the order of acquittal passed by the trial Court. Thus, this point is held accordingly.
POINT NP. 6:
23. IN THE RESULT, the appeal is dismissed.