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Judgment
Jawad Rahim
Complainant society is in appeal against acquittal of the respondent for the offence punishable u/s 138, Negotiable Instruments Act (hereinafter referred to as the Act, for brevity). The appellant co-operative society initiated prosecution of the respondent for the offence u/s 138 of the Act on a specific assertion that the respondent who is a dealer in arecanuts was purchasing arecanuts from the complainant on credit and used to pay monies subsequently. The appellant has maintained accounts of the sale transaction which shows respondent was liable to pay Rs. 40,000/-. The respondent/accused issued cheque for Rs. 40,000/- on 18.07.2001 towards of his liability. The cheque on presentation was dishonoured necessitating issuance of statutory notice which the respondent/accused received but failed to comply. He sent an untenable reply.
The jurisdictional magistrate has taken cognizance on the basis of such allegation and summoned the accused where he denied the liability. He was put to trial during which the appellant examined one Dattatreya on its behalf as PW1 and produced nine documents which includes the impugned cheque, bank endorsement, copy of the notice, postal acknowledgement and account extract as Ex.P8. The respondent/accused on his behalf produced bye-laws of the society and examined himself as DW1 and examined one Ramesh as DW2. His main defence is he has not issued the cheque towards discharge of any legal liability. He has categorically stated that he has been purchasing the arecanuts from the complainant and has been issuing cheques as security. The complainant has misused the cheque which was blank to institute the criminal proceedings. He denied he was liable to pay Rs. 40,000/- muchless any amount claimed by the complainant.
The learned trial Judge declined to accept the defence and proceeded to hold him guilty against which he was in appeal in Crl. Appeal No. 21/08. The Appellate Court on reappraisal of the evidence found the evidence as not establishing the charge against the accused and thus, has acquitted him. Assailing it, this appeal is filed.
The core contention of the learned counsel for the appellant is, the appellate court''s judgment is based on the erroneous interpretation of Section 138 of N.I. Act. He submits that the cheques could be issued towards entire liability or towards discharge of part of the liability. He submits that the learned appellate Judge has acquitted the respondent only because as per Ex.P8, Rs. 1,16,880/- was due by the accused, whereas the cheque issued was only for Rs. 40,000/-. He submits that such an approach was erroneous and was not sustainable. Drawing attention to certain admissions made by the accused that he had transacted with the appellant relating to purchase of arecanuts, he submits that it is enough to hold the cheque was issued towards existing debt or legal liability.
Keeping in mind what is urged by the learned counsel, I have examined the records in supplementation thereto. At the outset, it must be noticed in the complainant, averments are that respondent has business transaction and was purchasing arecanuts on credit. Undoubtedly, the appellant is a Society incorporated under the Act and therefore, it is required to maintain the accounts. The appellant has failed to produce the accounts relating to sale transaction which is the basis for quantifying the liability in terms of money. What it has produced is Ex.P8-bank account extract showing the final transaction i.e., payment made by the respondent and the alleged amount due. But there are no documents supporting the transaction of sale of arecanuts between the appellant and the respondent/accused.
Be that as it may, the complainant has to first establish existence of liability to make the cheque enforceable. Mere dishonour of the cheque may not generate cause of actin for the offence u/s 138 of the Act. The complaint is bereft of material particulars. Besides, it is brought on record that the appellant has already obtained an award against the respondent before the Registrar of Co-operative Societies. In other words, it has initiated two parallel proceedings one u/s 138 of Act and one under the provisions of Co-operative Societies Act to enforce the liability. To initiate civil or criminal proceedings relating to dishonour of cheque and in order to sustain action u/s 138, unless there is a clear proof for existence of liability, the action will have to be frustrated. This is because question as to what is the liability has to be determined by civil court of competent jurisdiction Court. The Magistrate Court has no competence to decide the issue regarding what is the liability if such a question arises. The liability should be quantified in terms of money and it must be existing at the time when the cheque was dishonoured. Hence, mere dishonour of will not justify the prosecution. In this view, I do not find the conclusion of Appellate Court is erroneous that calls for interference. The judgment is affirmed. The appeal is dismissed.