Duraisamy vs Kaniraj

S. Ashok Kumar, J.—Criminal Revision Case Nos. 554 and 555 of 2005 are filed by the complainant to enhance the sentence imposed and

award compensation to the accused in C.C. Nos. 300/2003 and 332/2001 respectively on the file of the learned Addl. District Munsif cum

Judicial Magistrate, Manamadurai, dated 1.8.2005, whereas the Criminal Appeal Nos. 12 and 13 of 2007 are filed against the judgments

rendered in C.A. Nos. 44 and 45 of 2005 on the file of the learned Sessions Judge, Sivagangai dated 20.7.2006 in reversing the well considered

orders rendered in C.C. Nos. 300/2003 and 332 of 2001 respectively, dated 1.8.2005.

The petitioner/appellant/complainant filed two complaints in C.C. Nos. 300/2003 and 332/2001 on the file of the Judicial Magistrate Court,

Manamadurai, u/s 138 of the Negotiable Instruments Act stating that the respondent issued 4 cheques each for Rs. 3 lakhs in his favour and those

cheques were dishonoured when presented and after statutory notice the complaints were filed. The trial court convicted the respondent and the

first appellate court set aside the conviction and sentence in C.A. No. 44 and 45 of 2005 on the file of the Sessions Court, Sivagangai. The

appellant filed C.S. Nos. 12 and 13 of 2007 against the said orders. The appellant also filed Crl.R.C. Nos. 554 and 555 of 2005 for enhancement

of sentence and hence all the four matters are taken up together.

It is the admitted case of both the parties that the appellant was the owner of M/s. K.A.S.A Tile Factory and the appellant and the respondent

entered into an agreement on 24.2.2001 for the ale of the entire scrap i.e., used machineries and materials, iron and wooden articles for a

consideration of Rs. 26lakhs and on that date of agreement itself the respondent paid Rs. 13 lakhs. As per the agreement which is marked as Ex.

D.1, the balance amount of Rs. 13 lakhs shall be paid in two installments Rs. 5 lakhs and Rs. 8 lakhs. It was further agreed that the respondent

shall remove the machineries, transformers, iron scraps and generator from 15.3.2001. The respondent was also permitted to remove the wooden

articles after payment of Rs. 5 lakhs and the remaining tiles, bricks and other materials on payment of Rs. 8 lakhs. It was also agreed that all the

articles shall be removed on or before 31.8.2001.

It is the admitted case of the parties that subsequent to the aforesaid agreement, there arose misunderstanding between the appellant and the

respondent and police complaint was given by the appellant on 18.5.2001 against the respondent and it was enquired by the police and at that

time, the appellant agreed to reduce to Rs. 1 lakhs for the delay and the respondent issued 4 cheques each for Rs. 3 lakhs and it was agreed that

the respondent shall pay Rs. 6 lakhs on 30.8.2001 and get back two cheques and after payment of Rs. 6 lakhs on 15.10.2001 the respondent

shall get back the remaining two cheques. The statement given by the appellant before the police in that regard has been marked as Ex.D.4. The

said four cheques are the subject matter of these revision and appeals.

The defence of the respondent/accused is that the cheques were given as security and as per the agreement he was not permitted to remove the

articles and the balance amount of Rs. 12 lakhs is to be paid only when he is permitted to remove the articles as per the agreement and therefore

there is no consideration for the cheques and there is no legally enforceable liability.

In the above context, the points for consideration in these appeals and revisions are:

(i) Whether there is any legally enforceable debt payable by the respondent? and

(ii) Whether the cheques were given by the respondent towards the discharge of the aforesaid legally enforceable debt?

Obviously, the notice issued by the respondent/accused on 8.9.2001 makes it clear that there is no dispute as regards the value of the property,

the amount payable by the respondent and the issuance of cheques for the purchase made. Thus the defence raised before the appellate court is

entirely alien to the notice issued by him on 8.9.2001. The defence before the appellate court are (a) that the complainant alone had entered into a

sale transaction without the consent of other partners and as such the agreement Ex.B.1 is unreasonable; (b) there is no legally enforceable debt;

(c) C.C. No. 30/03 initiated was base don dishonour of cheque for want of insufficient funds and C.C. No. 33/03 is for different purpose and

consequently the complaint is misconceived.

However, the learned Judicial Magistrate in C.C. No. 30 of 2003 had rejected the contention of the accused and had conclusively held that the

accused had committed the offence punishable u/s 138 of the Negotiable Instruments Act. But, the learned Judicial Magistrate did not award and

compensation to commensurate with the offence committed by the accused and only sentenced a flea bite punishment which resulted in the filing of

Crl.R.C. Nos. 554 and 555 of 2005.

It is also to be noted that the findings of the appellate court is not reasonable as there is no adequate reasons adduced for dissenting with the

conclusion arrived at by the learned Judicial Magistrate. Further, without even taking note of the fact that D.W.1 is an Assistant Engineer working

in TNEB and D.W.2 is a VAO and D.W.3 is a Sub Inspector of Police and none of the documents produced under D.1 to D.17 would advance

the case of the accused, the appellate court erroneously came to the conclusion that the accused was able to prove by cogent evidence that the

cheques were issued only as a security for the part performance of the agreement under Ex.D.1 and impugned cheques were issued and there was

no debt or liability much less legally enforceable debt or liability.

In the above context, it is to be taken note of that the legal notice issued under Ex.D.5, dated 18.9.2001 had anticipated the legal action

against the accused. According to the accused the cheques were issue only for the purpose of security. The cheques were dishonoured for want of

funds and Ex.A.3 and A.4 on 5.9.2001. Knowing fully well that he would be hauled up u/s 138 of the Negotiable Instruments Act, the accused

ingeniously issued the notice complaining that the cheques were issued as security and not with an intention to discharge the debt. This defence is

fallacious as the seller had obtained the cheques only to the value of the materials sold by him and nothing more. There is nothing to indicate that

the accused had entered into any such arrangement of security. In the absence of any evidence to show that the cheques were issued for specific

purpose, it is not open to the accused to turn that the cheques are not negotiable.

The fact that the accused had removed the goods from the premises would be evident from his notice. As per the arrangements entered

between the parties on 24.2.2001, Rs. 5 lakhs has to be paid a the time of removal of the wooden articles and on the payment of Rs. 8 lakhs the

accused is entitled to take the tiles, bricks and allied materials. Valuable materials like the generator, machineries, steel articles, transformer are to

be removed on payment of the part consideration of Rs. 13 lakhs. But even before payment of part consideration of Rs. 13 lakhs, wooden articles

and building materials were removed. This is revealing from the complaint lodged before the police on 18.5.2001. The complainant has stated

before the Police that in violation of the agreement, the building materials, wooden articles and other materials had been removed by the accused

and his men. The removal of the valuable materials by the accused is fortified by the notice dated 8.9.2001 Ex.B.5 wherein he has admitted the

amount to be given was compromised between the parties and from Rs. 26 lakhs it was reduced to Rs. 25 lakhs and two cheqeus to the sum of

Rs. 6 lakhs each were given to the complainant for the said sum of Rs. 25 lakhs. So, in no way it can be construed that the debt is unenforceable in

law and in fact it is purely a legal and enforceable debt. When the reply notice clearly mentions the two cheque numbers and the quantum of

amount liable to be paid was mentioned in the said cheques, it is not legally tenable to object the liability of the accused merely by stating that the

issuance of the cheque was only as a security.

Further, D.Ws 1 to 3 are not parties to the transaction, agreement and are not aware or competent to speak of the extent of removal of

materials from the premises by the accused, and relying upon their evidence to reject the complaint by the appellate court is erroneous. In

Paragraph 9 of the notice the accused has admitted that from 18.6.2001 to 18.8.2001, he was able to remove iron scrap materials from the

factory premises of the complainant, which would establish that after having removed all the materials without payment of the full consideration,

frivolous and vexatious defenses have been taken to deny the owner of the property of his legitimate due.

The allegation made as regards the pendency of the Writ Proceedings, though not considered by the appellate Judge is also without any

substance and baseless. In the High Court the subject matter of challenge was payment of money to the electricity board for the services not

availed. This Court initially dismissed the writ petition for default and restored the writ petition passing a conditional order. The order only forbears

the sale of the premises. No sale was effected while the WP was pending. Premises does not include the movable articles. The writ petition also

came to be allowed on 7.6.2001. Therefore, this defence of the accused that he was unable to remove the materials is liable to be rejected in view

of his admission in Ex.D.5 that he had removed the articles from the premises. The Writ Petition filed challenging the demand of the TNEB has

nothing to do with the sale of machinery and other materials that are the subject matter of the agreement dated 24.2.2001.

The provisions of Section 138 of the Negotiable Instruments Act burdens the drawer with liability and criminal prosecution in the event of

failure to honour the instrument. In the present case, inasmuch as the cheques were issued for the purchase of the materials set forth in the

agreement dated 24.2.2001, it would be wrong to suggest that it was given only for the purpose of security. Even assuming it was given for

security in the even of failure to honour the Negotiable Instrument, the drawer is liable to be punished u/s 138 of the NI Act. In the present case,

the accused has not produced any accounts or books to establish that the value of the goods removed from the premises is any thing less than the

amount reflected in the cheques. Thus the onus which rest heavily on the shoulders of the accused has not been discharged and the appellate court

ought not to have relied upon the unsubstantiated defences raised before it. In the decision reported in M/s. General Auto Sales Vs. Vijalakshmi

D., , it has been held that even if a blank cheque has been given towards liability or even as security, when he liability is assessed and quantified, if

the cheque is filled up and presented to the bank, the person who had drawn the cheque cannot avoid the criminal liability arising out of Section

138 of the N.I. Act. This view has been affirmed in the decision reported in M.A. Mohana Pai Vs. V.A. Jabbar and Another, also. In the above

circumstances, the reversal of well considered findings of the learned Judicial Magistrate, by the appellate court is unreasonable and both the

Criminal Appeals are liable to the allowed.

As regards the Criminal Revision Cases, the learned Judicial Magistrate has imposed the punishment of 8 months sentence and Rs. 3000/- as

fine and in defualt to undergo imprisonment for a further period of one month. The sentence imposed by the learned Magistrate is not in consensus

with the law settled by this Court and the Hon''ble Supreme Court. It is the duty of the Magistrate to impose punishment commensurate with the

offence. In Judgment of the Hon''ble Supreme Court in Suganthi Suresh Kumar Vs. Jagdeeshan, , in para 12 it has been held by Their Lordships

as follows:

The total amount covered by the cheque involved int he present two cheques was Rs. 4,50,000/-. There is no case for the respondent that the said

amount had been paid either during the pendency of the cases before the trial court or revision before the High court or this Court. If the amounts

had been paid to the complainant there perhaps would have been justification for imposing a flee bite sentence as had been chosen by the rial

court. But in a case where the amount covered by the cheque remained unpaid it should be the look out of the trial magistrates that the sentence for

the offence u/s 138 should be of such a nature as to give proper effect to the object of the legislation. No drawer of the cheque can be allowed to

take dishonour of the cheque issued by him light heartedly. The very object of enactment of provisions like 138 of the Act would stand defeated if

the sentence is of the nature passed by the trial Magistrate. It is a different matter if the accused paid the amount at least during the pendency of the

case.

One of the defence now raised is that the dispute is of civil in nature. This submission is not sustainable since the liability to pay the dues as per

the agreement had been admitted by the accused. The accused himself acted on the agreement and removed the valuable machineries from the

factory premises of the complainant after making part payment. Only towards balance payment for wooden articles and tiles, which are yet to be

removed, the cheques have been issued. The Hon''ble Supreme Court in a decision in Suganthi Suresh Kumar Vs. Jagdeeshan, held that

subsequent filing of a civil suit for recovery of the said amount will not be a ground for lessening the gravity of the offence or to impose a minor

sentence.

As per the Section 138 of the Act, the accused can be punished with imprisonment for a term which may be extended to two years or with fine

which may extend to twice the amount of the cheque or with both. It is also not in dispute that u/s 357 Cr.P.C., the trial court can award

compensation to the complainant in appropriate cases. In the above circumstances, I am of the view that the accused is liable to pay the cheque

amounts as compensation.

In the result, both the Criminal Appeals are allowed, setting aside the judgments rendered in C.A. Nos. 44 and 45 of 2005 on the file of the

learned Sessions Judge, Sivagangai dated 20.7.2006 and restoring the orders passed in C.C. Nos. 300/2003 and 332 of 2001, dated 1.8.2005

with modification of sentence. The conviction of the accused u/s 138 of the N.I. Act is affirmed and apart from the punishment imposed by the trial

court, the accused shall pay compensation of the 4 dishonoured cheque amounts namely 6,00,000/- each in both revisions, within a period of 3

months, in default, to undergo further rigorous imprisonment for a period of one year. Sentence of imprisonment in both cases to run concurrently.

With the above modification, both the Criminal Revision Cases are ordered accordingly.